a. General Mills, Inc., the large manufacturer of packaged foods, reported the following in its annual report

Question:

a. General Mills, Inc., the large manufacturer of packaged foods, reported the following in its annual report for the year ending May 29, 2011 (in millions):

Short-term borrowing …………………………….. $1,342.6

Long-term debt …………………………………… 5,542.5

Stockholders' equity ………………………………. 6,616 .2

The short-term borrowing and long-term debt are carried on the balance sheet at approximately their market value. The firm's 644.8 million shares traded at $36.50 per share when the annual report was released. From these numbers, calculate General Mills's enterprise market value (the market value of the firm).

b. Hewlett-Packard, the computer equipment manufacturer and systems consultant, had 2,126 million shares outstanding in May 2011, trading at $41 per share. Its most recent quarterly report listed the following (in millions):

Investments in interest-bearing debt

securities and deposits ……………………………… $12,700

Short-term borrowings ………………………………. 8.406

Long-term debt ……………………………………… 14,512

Stockholders' equity ………………………………… 41,795

Calculate the enterprise market value of Hewlett-Packard. The question requires you to consider the treatment of the interest-bearing debt investments. Are they part of the enterprise?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...