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Dupont Analysis

In: Business and Management

Submitted By bozzyboo
Words 347
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Kellogg Co.

Net Income =352 millions
Total Assets = 15.1 billions
Equity = 2.56 billions
Net Sales = 14197 millions

ROE = 13.75%
ROA = 2.3%
ROS = 24.79%
Equity Multiplier = 5.98
Total Asset Turnover = .00094

General Mills

Net Sales = 17774.1 millions
Total Assets = 22.7 billions
Net Income = 366300 millions
Equity = 6.67 billions

ROE = 5.4%
ROA = 1.6%
ROS = 20.61%
Equity Multiplier = 3.38
Total Asset Turnover = .00078

Kellogg Co. has a higher return on their assets, thus we see a higher total asset turnover than General Mills. The total asset turnover measures the company's ability to generate sales with the assets it has. Kellogg's ROE is 5.98 times its ROA because of its use of other people's money. When we look at General Mills ROE is lower than Kelloggs Co. ROE, their ROE is only 3.38 times their ROA, showing that they are using less of other peoples money. In my opinion, General Mills. is operating better than Kellogg's. The analysis shows a more effective use of assets by General Mills, and we can see the results in the net income. General Mills has more sales, thus producing more income.

Common Size Income Statement Analysis

General Mills

Sales |17774B |100.00% | |COGS |10.74B |60.00% | |Gross Income |6.45B |36.00% | |Taxes |741.2M |4.20% | |Net Income |366,300B |21.00% | |

Kelloggs

Sales |14.2 B |100.00% | |COGS |8.45B |60.00% | |Gross Income |5.74B |40.00% | |Taxes |363M |3.00% | |Net Income |352B |25.00% | |

Common size analysis expresses each account as a percentage of the value of sales. Kellogg's has a higher gross income percentage than General Mills by 4%. Also resulting in a 4% difference in their net income. Kellogg's has a higher net income, but lower sales. Even though General Mills has higher sales, their COGS is equal in percentage to Kellogg's COGS. Their COGS

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