Kellogg Company has its headquarters in Battle Creek, Michigan. The company manufactures and sells ready-to-eat breakfast cereals and convenience foods including cookies, toaster pastries, and cereal bars. Selected data from Kellogg Company?s recent annual report follows (dollar amounts in millions).

In its annual reports, Kellogg Company has indicated that it plans to achieve sustainability of its operating results with operating principles that emphasize profit-rich, sustainable sales growth, as well as cash fl ow and return on invested capital. Kellogg believes its steady earnings growth, strong cash fl ow, and continued investment during a multi-year period demonstrates the strength and flexibility of its business model.

Instructions

a. Compute the percentage change in sales, operating profit, net cash fl ow less capital expenditures, and net earnings from year to year for the years presented.

b. Evaluate Kellogg?s performance. Which trend seems most favorable? Which trend seems least favorable? What are the implications of these trends for Kellogg?s sustainable performance objectives? Explain.

Transcribed Image Text:

Current Year Prior Year $14,792 41.26 2,837 1,170 1,808 2 Years Ago $14,197 38.28 Sales Gross profit % Operating profit Net cash flow less capital expenditures Net earnings $14,580 34.73 1,024 1,211 1,562 1,225 961 633