Kellogg Company is the world's leading producer of ready-to-eat cereal products. In recent years, the company has taken numerous steps aimed at improving its profitability and earnings per share. Presented below are some basic facts for Kellogg. (in millions) Current Year Prior Year Net sales $14,792 ** $14,580** Net income 1,807 ** 632** Total assets 15,474 ** 15,153** Total liabilities 11,867 ** 12,302** Common stock, $0.25 par value 105 ** 105** Capital in excess of par value 626 ** 678** Retained earnings 6,749 ** 6,689** Treasury stock, at cost 2,999 ** 3,470** Number of shares outstanding (in millions) 363 ** 358** Instructions a. What are some of the reasons that management purchases its own stock? b. Explain how earnings per share might be affected by treasury stock transactions. c. Calculate the debt to assets ratio for the current year and the prior year, and discuss the implications of the change.
Kellogg Company is the world's leading producer of ready-to-eat cereal products. In recent years, the company has taken numerous steps aimed at improving its profitability and earnings per share. Presented below are some basic facts for Kellogg. (in millions) Current Year Prior Year Net sales $14,792 ** $14,580** Net income 1,807 ** 632** Total assets 15,474 ** 15,153** Total liabilities 11,867 ** 12,302** Common stock, $0.25 par value 105 ** 105** Capital in excess of par value 626 ** 678** Retained earnings 6,749 ** 6,689** Treasury stock, at cost 2,999 ** 3,470** Number of shares outstanding (in millions) 363 ** 358** Instructions a. What are some of the reasons that management purchases its own stock? b. Explain how earnings per share might be affected by treasury stock transactions. c. Calculate the debt to assets ratio for the current year and the prior year, and discuss the implications of the change.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Kellogg Company is the world's leading producer of ready-to-eat cereal products. In recent years, the company has taken numerous steps aimed at improving its profitability and earnings per share. Presented below are some basic facts for Kellogg.
| (in millions) |
Current Year
|
Prior Year
|
| Net sales |
$14,792 **
|
$14,580**
|
| Net income |
1,807 **
|
632**
|
| Total assets |
15,474 **
|
15,153**
|
| Total liabilities |
11,867 **
|
12,302**
|
| Common stock, $0.25 par value |
105 **
|
105**
|
| Capital in excess of par value |
626 **
|
678**
|
|
6,749 **
|
6,689**
|
|
|
2,999 **
|
3,470**
|
|
| Number of shares outstanding (in millions) |
363 **
|
358**
|
Instructions
a. What are some of the reasons that management purchases its own stock?
b. Explain how earnings per share might be affected by treasury stock transactions.
c. Calculate the debt to assets ratio for the current year and the prior year, and discuss the implications of the change.
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