Problem: Review the financial statements of General Mills and Meiji Holdings Co., Ltd.
List items in the equity section.
Are there preferred shares?
Any treasury stock?
List basic and diluted EPS
Any discontinued operations?
Any stock compensation plans? What method to value stock? Stock compensation expense reported?
Compute these ratios and discuss the "story" they tell:
• Profitability ratios:
o Gross profit margin
o Net profit margin
o Return on stockholders' equity
• Liquidity ratios:
o Current ratio
o Quick ratio
o Inventory turnover
• Leverage ratios:
o Debt-to-assets
o Debt-to-equity
o Times-covered ratio
What is most informative? (balance sheet, income statement or ratios)
Discuss the advantages and disadvantages of using ratios.