Reformulated balance sheets and income statements for General Mill's 2008 fiscal year are in Exhibits 9.5 and

Question:

Reformulated balance sheets and income statements for General Mill's 2008 fiscal year are in Exhibits 9.5 and 9.11 in Chapter 9. The firm's 337.5 million outstanding shares traded at $60 each at the time the 2008 statements were published. From these financial statements, calculate the following for fiscal year 2008:

a. Free cash flow.

b. Residual operating income based on beginning-of-year balance sheet numbers. Use a required return for operations of 5.8 percent (the number in Box 13.2).

c. Enterprise price to book at the end of 2008.

d. Trailing enterprise P/E at the end of 2008.

Do you feel comfortable using the 5.8 percent required return from Box 13.2?

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...