The liquidity position of General Mills has been assessed by calculating the current ratio, quick ratio and the working capital over sales ratio for the company. First of all, if we look at the current ratio of the company, then it could be seen that the current ratio of the company has declined over the past 5 years with an average ratio of 0.86 times. Along with this, the current ratio of all the competitors and the industry is weak but higher than the ratio of General Mills Company. This is alarming for the company as the company does not have enough short term assets to pay off short term obligations if they fall due immediately. Similar is the situation with the quick ratio of the company which is too low for the company showing that the liquid assets are also too low. Finally, the negative net working capital over sales ratio shows that the working capital management policies of the company are weak and it is not managing its current liabilities well.


            Morever, if we assess the profitability of the company through the profitability ratios as shown in the appendix, then it could be seen that the company is doing well with regard to profit generation from its business sales. The net profit margin, operating market and the gross profit margin are all higher for the company as compared to its competitors and the industry average ratios. This shows that the four businesses of the company are performing quite well and generating good profits for the company as a whole. The gap between the profitability ratios of General Mills Company and its competitors is quite high. This shows that the performance of General Mills Company is impressive with regard to its profit potential.

Asset Management

            The management of the assets by the management of the company has also been analyzed through four different ratios. First of all, the inventory turnover ratio has been calculated which shows an increasing trend for General Mills Company and this ratio is higher for the company as compared to its competitors except Kraft Foods Company and the industry average. The accounts receivables turnover is lower for the company as compared to its key competitors and industry which shows that the company has problem collecting its receivables on time.

            The total asset turnover ratio for the company has increased in 2015 but it would decline in 2016 with an average of 0.73 ratios over the last 6 years. General Mills Company has the lowest ratio in the industry among all the players which shows that the company is not utilizing its total assets efficiently to generate sales for its business. The fixed assets turnover ratio also shows a similar situation for the company. Overall, the asset management is weak for General Mills Company as compared to its key competitors and the industry.

Debt Management& Capital Structure Analysis

            A range of key ratios have calculated in order to assess the management of the debt of the company. First of all, the total debt to assets ratio and the long term debt to assets ratio show that the debt has been used extensively by the company to finance its assets which is not a good sign for a business in such sector. The company does not need to rely on debt financing to this extent. Similarly, the financial leverage ratio for General Mills Company shows that the company has been extensively using its debt to finance its assets and this has been increasing each year over the past 5 years.

            The company has an average ratio of 2.84 which is higher than all the competitors and the industry. On the other hand, if we look at the equity multiplier ratio of the company then it could be again seen that the assets of the company are being financed by debt and equity but the debt portion is significantly higher. Overall, General Mills Company is highly leveraged. Finally, if we compare the average interest coverage ratio of General Mills Company of 8 times with industry and its competitors then this shows that the ratio for the company is average. However, the increase in the ratio from 2015 to 2016 shows that this would improve over the next few years………………

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