2) Financial Statement Analysis Cases

Case 1 Kellogg Company

Kellogg Company is the worlds leading producer of ready-to-eat cereal products. In recent years, the company has taken numerous steps aimed at improving its profitability and earnings per share. Presented below are some basic facts for Kellogg.

Instructions:

a) What are some of the reasons that management purchases its own stock?

b) Explain how earnings per share might be affected by treasury stock transactions

c) Calculate the ratio of debt to assets for 2010 and 2011, and discuss the implications of change.

2011 Net Sales Net Income Total Assets Total Lia bilities Common stock, $0.25 par value Capital in excess of par value Retained earnings Trea sury stock, at cost Number of sha res outsanding (in Millions) S 2010 $ 13,198 $12,397 1,240 $11,901 $ 11,847 9,693 105 495 6,122 2,650 366 1,229 10,139 $ 105 S 522 $ 6,721 S 3,130 357 $