Financial Analysis of Kellogg's Essay Example | Topics and Well Written Essays - 5000 words

Financial Analysis of Kellogg's - Essay Example It adds to the impression of the customers as to how well they're doing and at the same time gives challenge to its competitors. This section roughly discusses the financial performance in a six-year time (2000-2005). At a particular year, 2001, Kellogg Company released its own financial analysis of that year giving explanations and answers to the growth in the proceeding years. An apparent growth has been observed right from 2000 to 2005 in Kellogg's financial performance. Comparisons are often useful within a company to become aware of changes in financial relationships and significant trends. In the Intracompany Basis, a comparison of current year's cash amount with the prior year's cash amount shows either an increase or decrease. And within the span of 6 years (2000-2005), it is very useful to compare such cash amount from the first year (i.e. 2000) compared to the last year of comparison (i.e. 2005). Cash amount gained or lost may vary from 2000-2005. The proportion of total assets in the form of cash can be shown through a comparison of Kellogg's year-end cash amount with the amount total assets at year-end. Furthermore, in order to provide insight into Kellogg's competitive position, it is also practical to compare it with other companies. Correspondingly, Kellogg's total sales for the year can be compared with the total sales of its competitors such as Quaker Oats and General Mills which both obviously competes in the market. Taken as a whole, comparisons with industry averages will provide information about Kellogg's relative position within the industry. Then, Kellogg's financial data can be compared with the averages for its industry compiled by financial ratings organizations such as Dun & Bradstreet, Moody's, and Standard & Poor's. Kellogg's 2000 Financial Analysis In 2000, Kellogg Company achieved growth in net earnings and earnings per share, excluding charges, despite softness in the Company's U.S. convenience foods business, higher energy prices and interest rates, weak foreign currencies, and inventory write-offs in Southeast Asia. Through manufacturing efficiencies, reduced advertising and overhead expenses, and recognition of benefits related to U.S. tax credits, the Company was able to withstand despite such factors. 2000 1999 1998 Net earnings $597.7 $339.3 $502.6 Net earnings per share $1.45 $0.83 $1.23 Due to the previously stated factors or charges, there are exclusions from the results of operations in the following sections for purposes of comparison between years. The year 2000 and 1999 have been compared excluding charges, net earnings and earnings per share in the below table: 2000 1999 Charge Net earnings $651.9 $606.2 +7.5% Net earnings per share $1.61 $1.50 +7.3% The full-year increase in earnings per share of $0.11 consisted of $0.02 from business growth and $0.11 from favorable tax-rate movements, partially offset by $0.02 from unfavorable foreign currency movements. Kellogg's Company then continued to lead the global ready-to-eat cereal category in 2000 with an estimated 38% annualized share of worldwide dollar sales. Category share for the Company's operating segments was approximately 31% in the United States, 43% in Europe, 60% in Latin America, 45% in Canada, 57% in Australia, and 50% in Asia. The growth achieved by Kellogg's Company by the end of 2000