Financial Statement Analysis: General Mills and Kimberly-Clark

This assignment provides a detailed financial statement analysis, focusing on discounted cash flow (DCF) valuation and free cash flow (FCF) analysis. The analysis includes two main tasks: the first involves DCF valuation of General Mills, Inc., calculating present values of free cash flows, and determining firm and equity values under scenarios with and without growth. The second task focuses on free cash flow for Kimberly-Clark Corporation, involving the reformulation of the balance sheet and the calculation of FCF using two different methods. The assignment includes the calculation of free cash flow using two different methods and provides a net payout to shareholders. The document concludes with a list of relevant references, including books, journals, and online resources related to financial analysis and free cash flow.

Financial
Statement
Analysis

Contents
TASK...............................................................................................................................................1
Chapter 4: Discounted cash flow valuation: General Mills, Inc...........................................1
Chapter 11 Free Cash Flow for Kimberly-Clark Corporation:..............................................2
REFERENCES:...............................................................................................................................5

TASK
Chapter 4: Discounted cash flow valuation: General Mills, Inc.
A). This workout covers measuring free cash flows, discounting them to present value, after that
add the present value of a consistent value. For part (a) of the question, the consistent value has
no development:
Particulars 2005 2006 2007 2008 2009
Cash flow
from
operations
2014 2057 2095 2107
Cash
investment in
operations
300 380 442 470
Free cash
flow (FCF)
1714 1677 1653 1637
Discount rate 0.917431 0.84168 0.772183 0.708425
PV of FCF 1572.50 1411.50 1276.42 1159.70
Total of PV to
2009
5419
Continuing
Value (CV)
18189
PV of CV 12885
Firm value 18,304
Net debt 6192
Equity value 12112
Value per share is calculated on 369 Million shares= 32.82
Continuing value (no growth) = 1637/0.09= 18189
PV of CV= 18189*0.708425=12885
B). Along with the growth of 3% after passing 2009, the continuing value is:
CV= (1637^1.03)/ (1.09-1.03) = $28,101.83
1

The present value of continuing value which is $28,101.83*0.708425=$19908.
Do the valuation is as follows:
Particular Amount
Total of PV to 2009 5419
Continuing value 28101.83
PV of CV 19908
Net Debt 6,192
Equity Value 19,135
Value per share on the 369 Million share= $51.86.
Value to price ratio= 51.86/47=1.10
Chapter 11 Free Cash Flow for Kimberly-Clark Corporation:
A). Reformulate the balance sheet:
Particulars 2007 2008
Operating
Assets
$18057.0 $16796.2
Operating
liabilities
$6011.8 $5927.2
Net Operating
Assets
=$18057-
$6011.8=$12045.2
$16796.2-
5927.2=$10869.0
Financial
Assets
$6496.4 $4395.4
Financial
Assets
382.7 6113.7 270.8 4124.6
Common
Equity (CSE)
$5931.5 $6744.4
2

Free Cash Flow by using Method 1,
Free cash flow is calculated by using the formula. Which have been mentioned hereunder:
Free Cash Flow = Operating Income- Change in the net operating assets
= $2740.1-(12,045.2- 10,869.0) = $1563.9
Free Cash Flow by Using Method 2,
Free Cash Flow = Net Financial Expenses- ΔNFO + d
= 1477.1- (6113.7-4124.6) +3405.9
= 1563.9
Net pay out to shareholders (d) = Comprehensive Income – ΔCSE
= (2740.1-147.1)- (-812.9)
= 3405.9
(b).
The firm cash flow operation from of the company is mentioned as under and other things have
been mentioned. Apart from that, various
Particulars Amount
Cash flow from operations $2429 Million
Less: Interest expenses -142.4 Million
Profits before tax 2286.6 Million
Statutory Tax@ 36.6% 836.9
Profit After Tax from operating activities 1449.7 Million
3

Free Cash Flow = Operating Income- Change in the net operating assets
= 1449.7- (12045.2-10869)=273.5
4