Refer to the financial statements of Quaker Oats Company with the following footnotes. ($ millions) Year 11
Question:
Refer to the financial statements of Quaker Oats Company with the following footnotes.
($ millions) | Year 11 | Year 10 | Year 9 | ||||
Advertising, media and production | $277.5 | $ 282.8 | $ 256.5 | ||||
Merchandising | 1,129.9 | 912.5 | 886.2 | ||||
Total advertising and merchandising | $1,407.4 | $1,195.3 | $1,142.7 | ||||
Maintenance and repairs | $ 96.1 | $ 96.6 | $ 93.8 | ||||
Depreciation expense | $125.2 | $ 103.5 | $ 94.5 | ||||
Research and development | $44.3 | $ 43.3 | $ 39.3 | ||||
INTEREST (INCOME) EXPENSE | |||||||
($ millions) | Year 11 | Year 10 | Year 9 | ||||
Total interest expense | $101.9 | $120.2 | $ 75.9 | ||||
Total interest income | (9.0) | (11.0) | (12.4) | ||||
Net interest allocated to discontinued operations | (6.7) | (7.4) | (7.1) | ||||
| Year 11 | Year 10 | Year 9 | ||||
|
Amount | % of Pretax Income | Amount | % of Pretax Income | Amount | % of Pretax Income | |
| |||||||
($ millions) | |||||||
Tax provision based on the federal statutory rate | $139.9 | 34.0% | $130.0 | 34.0% | $81.3 | 34.0% | |
State and local income taxes, net of federal income tax benefit | 16.7 | 4.1 | 11.9 | 3.1 | 7.7 | 3.2 | |
ANC benefit | — | — | — | — | (1.7) | (.7) | |
Repatriation of foreign earnings . | 4.3 | 1.0 | 4.8 | 1.3 | (2.1) | (.9) | |
Non-U.S. tax rate differential | 8.2 | 2.0 | 9.8 | 2.5 | 8.8 | 3.7 | |
U.S. tax credits | (.2) | — | (.1) | — | (.7) | (.3) | |
Miscellaneous items—net | 6.8 | 1.6 | (2.9) | (.8) | (3.1) | (1.3) | |
Actual tax provision | $175.7 | 42.7% | $153.5 | 40.1% | $90.2 | 37.7% | |
OTHER (INCOME) EXPENSE | |||||||
($ millions) | Year 11 | Year 10 | Year 9 | ||||
Foreign exchange (gains) losses-net | $(5.1) | $ 25.7 | $ 14.8 | ||||
Amortization of intangibles | 22.4 | 22.2 | 18.2 | ||||
Losses (gains) from plant closings andoperations sold or to be sold— net | 8.8 | (23.1) | 119.4 | ||||
Miscellaneous—net | . 6.5 | (8.4) | (2.8) | ||||
Net other expense | . $32.6 | $ 16.4 | $149.6 |
Required:
a. Recast Quaker Oats’ income statements through Income from Continuing Operations for Years 11, 10, and 9 (estimate federal income tax at 34%).
b. Interpret trends revealed by the recasted income statements.
Financial Statement Analysis
ISBN: 978-0078110962
11th edition
Authors: K. R. Subramanyam, John Wild