Kelloggs Analysis

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Kelloggs Analysis (1997 Financial Analysis) Introduction: Kellogg Company and its subsidiaries are engaged in the manufacture and marketing of ready-to-eat cereal and convenience food products on a worldwide basis. The principal products of the Company are ready-to-eat cereals and convenience food products, which are manufactured in 20 countries and distributed in more than 160 countries. The Company's products are generally marketed under the Kellogg's and Morningstar Farms names, and are sold principally to the grocery trade through direct sales forces for resale to consumers. The Company uses broker and distribution arrangements for certain products, as well as in less-developed market areas. In the United States, in addition to ready-to-eat cereals, the Company produces and distributes toaster pastries, frozen waffles, frozen pancakes, crispy marshmallow squares, cereal bars and meat alternatives. The Company also markets these and other convenience food products in various locations throughout the world. Liquidity: LIQUIDITY 1997 1996 UQ MED LQ Current Ratio 0.8856x .6951x 2.7x 1.9x 1.6x Acid Test Ratio 0.459 0.3802 1.2x .8x 1.6x Net Working Capital -189,600,000 -670,400,000 645,412,000 Kellogg’s 1997 current ratio and acid test ratio when compared to 1996 figures indicates a positive trend considering liquidity. When compared to their peers Kellogg’s is not as liquid. The change that effected current liabilities the most was a decrease in current maturities of long-term debt of $290,000,000. Notes payable also decreased in 1997 to $368,600,000 from $652,600,000 in 1996. The increase in net working capital is also due mainly to reductions in current maturities of long-term debt as well as notes payable. Kellogg’s net working capital which is negative, when compared to peers illustrates that they are very illiquid. Efficiency: EFFICIENCY 1997 1996 UQ MED LQ A/R Turnover 11.6257 11.3644 14.9 11.4 9.8 A/R Turnover in Days 31.395 32.118 24 32 37 Inventory Turnover 7.5296 7.3497 13.9 9.6 7.5 Inventory Turnover in Days 48.4754 49.6619 26 38 49 Operating Cycle 79.8704 81.7979 50 70 86 When comparing Kellogg’s 1997 A/R turnover to 1998 it has increased by .26x moving it slightly past t... ... middle of paper ... ...00 total assets 4,877,600,000 5,050,000,000 0.111940299 0.105148515 equity multipilier total assets 4,877,600,000 5,050,000,000 SHE 997,500,000 1,282,400,000 4.889824561 3.937928883 Investor: Earnings per share 1.32 1.25 net income (-preffered dividends) INFO GIVEN INFO GIVEN weighted average number of common stocks outstanding P/E ratio market price 49.63 32.75 Diluted earnings per share 1.36 1.25 36.5 26.2 Divedend payout Dividend per common share 0.87 1.1 Diluted earnings per share 1.32 1.25 0.659090909 0.88 % of earnings retained Net income minus all dividends 185,900,000 187,300,000 Net income 546,000,000 531,000,000 0.3405 .3527 Dividend Yield Dividend per common share 0.87 1.1 market price per share 49.63 32.75 1.75 3.36 Book value total stockholders equity 997,500,000 1,282,400,000 minus prefered stock equity 0 0 number of common shares outstanding 414,800,000 311,500,000

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