Assignment : Capital budget expenditure analysis
Annual reports provide significant information about an organization's capital budget and capital budgeting process. Campbell Soup Company provides financial reports for several years at www.campbellsoup.com (Our Company → Investor Center → Financial Information → Annual Reports). This exercise will require you to use Campbell's consolidated statements of cash flows, management's discussion and analysis of financial condition and results of operations, and notes to the consolidated financial statements for the most recent year presented.
Required: Using Campbell's most recent annual report, answer the following:
a. From Campbell's consolidated statements of cash flows:
1. Identify the amount of cash used for capital expenditures from the Investing Activities section. How much cash was provided from the sale of capital assets?
2. How do these amounts compare to the previous two years? Comment on the trend relative to the general cash flow position for each year.
b. Read Campbell's discussion of the "Business," and highlight the information provided about capital expenditures reported in 2011 and plans identified for 2012.
c. Read Campbell's discussion of the "Risk Factors." How may the company be adversely impacted by failure to execute acquisitions and divestitures successfully?
d. Read Campbell's management's discussion and analysis of financial condition and results of operations.
1. In the Liquidity and Capital Resources section, how were investing cash flows used or provided for capital expenditures?
2. In the Significant Accounting Estimates section, how are fixed assets reviewed for impairment? What role does management judgment play?
e. From Campbell's notes to the consolidated financial statements, determine the following:
1. How does Campbell's value and depreciate property, plant, and equipment?
2. If applicable, describe Campbell's acquisitions for the year.
3. If applicable, describe Campbell's divestitures for the year.
4. How were Campbell's capital expenditures distributed among its business segments?
f. From Campbell's selected financial data, do the following:
1. For the five years presented, calculate the ratio of capital expenditures to net sales.
2. For the five years presented, calculate the ratio of net plant assets to total assets.
3. Comment on the trends.