General Mills Inc. Understanding Financial Statements

Introduction The case study General Mills Inc. - Understanding Financial Statements focuses on the most basic idea of finance analysis. This case is a brief look into the language that is used in the finance world and a start to interaction with auditors. In this case, KPMG LLP, the public accounting firm that was auditing their statements, had sent two opinion letters. The first letter was ensuring that both parties were aware that General Mills had internal control over financial reporting. The second opinion letter stated that to auditor’s knowledge, General Mills had correctly reported its financial statements. The statements given in this case study are known as the four general financial statements. Displayed in the case are the Consolidated Statements of Earnings from years 2004 to 2006, the Consolidated Balance sheet from 2004 to 2006, the Consolidated Statement of shareholders’ equity from 2004 to 2006, and the Consolidated Statement of Cash Flows from 2004 to 2006. These general pieces of finance material provide enough information to analyze General Mills over the past two years. Thanks to the financial statements provided, we had the ability to compare the company’s performance in 2005 and 2006, and to see whether the company was still in good standing or not. The following is a basic analysis and interpretation of General Mills financial statements.

Concepts

a. General Mills is a food company. Its main activities consist on producing and selling ready-to-eat food, as well as doing retail business. These activities take place in the U.S., Canada, Europe, Latin America and the Asia/Pacific region.

b. Consolidated balance sheet, consolidated income statement, consolidated shareholders’ equity, and consolidated cash flow statement are the financial statements that are addressed to external audiences. General Mills submit consolidated financial statements because the accounts represent the company and its subsidiaries.

c. The SEC