Introduction
The food manufacturing and processing industry have become one of the biggest sectors in the business world. This has been greatly influenced by the increasing demand for processed foods in the current busy world where people have little time to spare for cooking. Urbanization has further influenced consumer preference for processed foods. The highest growth rate has been registered mostly in the developed countries such as China, Japan, the United States of America, the United Kingdom, and India to mention a few. Meiji Holdings Company and General Mills Company are among the biggest food companies in the world. This report seeks to analyze and compare the financial statements of the two companies to identify which one is more profitable.
Brief Review of the General Mills Company
General Mills is one of the largest companies worldwide in the food and beverages industry. The company boasts of a capital base of approximately 33 billion dollars, which is a significant amount. The company was inaugurated in the late 1920s and ever since the company manufactures and markets food products that are sold in retail stores (General Mills, 2013). In addition to branded processed foodstuff, the company produces and supplies unbranded food products (General Mills, 2013). The company mostly deals in three central areas, the foodservice and bakeries, United States retail, and the international sector (General Mills, 2013).
Furthermore, General Mills sells ready-to-eat breakfast cereal. In 2012, the company obtained Yoki Alimentos SA and Food Should Taste Good, a firm situated in Needham Heights (General Mills, 2013). Over a long period, the gross income for General Mills has increased from 16.7 billion dollars to 17.8 billion dollars (General Mills, 2013). Most outstandingly, the company has been successful in plummeting costs related to broad management and selling from 20.29% to 19.99% (General Mills, 2013). This was its greatest achievement and the backbone of the company’s growth from 1.6 billion dollars to 1.9 billion dollars (General Mills, 2013).
Brief Review of the Meiji Holdings Co., Ltd.
Meiji Holdings Co., Ltd. is a conglomerate involved in many industries. The company is based in Asia, Europe, and North America but its headquarters is in Tokyo, Japan (Meiji Holdings, 2013). This is a major company with a human capital of over 14,000 employees. The company’s revenue collection is also a major success with its record of 13, 603.9 million dollars in the financial year ending in March 2013 (Meiji Holdings, 2013). This was a 1.6 % increment from the previous year. The company recorded a 28.1% rise in its profits in the same year, which was an indication of good business.
Accounting Standards Used
Although Meiji Holdings Company and General Mills Company are significantly comparable in terms of the services they offer, they employ contrasting accounting standards. Accounting standards are authoritative ethics for monetary reporting. These guidelines spell out how pertinent actions and dealings are to be documented, revealed, calculated, and presented in financial statements (Walther, 2012).
These standards intend to expose financial data to suppliers, financiers, and other stakeholders that are crucial in decision-making (Walther, 2012). In addition, these standards offer a consistent way of contrasting the financial statements of different firms. The General Mills Company’s financial statement employs the United States GAAPs in its financial reports (Walther, 2012). The arrangement and the content of General Mills’ financial statements point out that the firm employs the FASB accounting standards.
Differences in the Annual Statements Found on the Companies’ Websites
In the General Mills Company’s balance sheet, non-current assets are accounted for independently from the current assets. In the same way, non-current liabilities are also accounted for independently from current liabilities. Additionally, only current assets that are anticipated to be achieved inside the company’s fiscal year are indicated. In the General Mills company cash flow statement, cash expenditure and proceeds are classified into financing actions, operating actions, and investing actions (Walther, 2012). Besides, all the applicable data concerning financing actions and cashless investing has been documented in the cash flow.
Meiji Holdings shareholders’ equity is inclusive of treasury shares, stated capital, retained earnings, and additional paid-in capital (Wild, 2008). Their operating costs are arranged according to their nature and the profit is prepared in bits. This varies from the General Mills company income statement where several steps technique is employed. These steps include the cost of sales subtracted from the overall sales and current gross profit and current income ahead of income tax (Wild, 2008). The net assets include translation adjustments, shareholders equity, stock options, and minority interest (Wild, 2008).
Auditing Standards Used by the External Auditors
In General Mills, the Public Company Accounting Oversight Board standards are used for external auditing (Wild, 2008). These standards guarantee that audits gain rational assertions on the subject of whether the financial statements lack material misstatement (Wild, 2008). It also shows whether the internal controls are efficient in making certain impartial and accurate financial documentation. Meiji Holdings Co. Ltd., on the other hand, employs the Japanese Generally Accepted Accounting Principles (Wild, 2008).
Difference Between a 10-K and Corporate Social Responsibility
A 10-K is a yearly filing that the United States publicly traded companies are obligated to submit to the SEC (Wild, 2008). These financial data present information essential for investors to make judgments concerning the selling and buying of shares (Wild, 2008). Corporate social responsibility statement is a file published by a corporation showing its programs to take accountability and review its impact on social interests. In contrast, a corporate social responsibility statement is intended to communicate a company’s social responsibility assurance and its expansion and course as a socially sensitive venture (Wild, 2008). Both General Mills Company and Meiji Holdings Company present annual reports and corporate social responsibility reports to their stakeholders (Wild, 2008). General Mills Company files a 10-K report as a prerequisite by law.
Which of the two companies is more profitable?
General Mills records a gross profit margin of 33.97% while the Meiji Holdings Company records a gross margin of 36.18% (General Mills, 2013). Therefore, it is correct to say that General Millis is more profitable compared to Meiji Holdings.
Compare the growth of revenues vs. income over time and between the two companies.
Over three financial years, 2011-2013, the revenues of both companies’ steadily increased. Nonetheless, their incomes seem to assume an unusual tendency. General Mills’ incomes increased in 2011, decreased in 2012, and then increased in 2013 simultaneously (General Mills, 2013). Similarly, the same trend was seen in Meiji Holdings Co., Ltd.’s incomes for the same financial years (Meiji Holdings, 2013).
How can you explain the differences in profitability between the two companies?
The differences in the two companies’ profitability can be attributed to their size and asset base (Walther, 2012).
General Mills’ Annual balance sheet General Mills in dollars.
Meiji Holdings Co., Ltd. Annual balance sheet General Mills in dollars.
References
General Mills. (2013). Annual Report, Overview and Publications. Web.
Meiji Holdings. (2013). Meiji Group. Web.
Walther, L. (2012). Principles of Accounting. Web.
Wild, J. (2008). Financial Statement Analysis. New York, NY:McGraw-Hil.