Obtain the fiscal year-end financial statements for the two acquisitions listed below, and review the disclosures and accounting of the acquisitions.
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Obtain the fiscal year-end financial statements for the two acquisitions listed below, and review the disclosures and accounting of the acquisitions.
The General Mills/Blue Buffalo acquisition, completed on April 24, 2018. This is reported in General Mills 2018 10-k for the fiscal year ending May 27, 2018.
The Amazon/Whole Foods acquisition, completed on August 8, 2017. This is reported in Amazon’s 2017 10-k, for the fiscal year ending December 31, 2017.
In your paper, address the following for both transactions:
Identify the accounting method used to record the transaction.
Determine if the financial statements comply with generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS).
Identify the accounting method used to record the transaction.
Determine if there are any reported contingent assets or liabilities, or if there is any contingent consideration, from the acquisition.
Explain the amount of goodwill recorded for the transaction.
Determine the amount of goodwill that will be amortized in the future (if any) and predict the amount of amortization that be reported in future years.
Determine how many months of financial results are included in the fiscal year operating results (e.g., revenues, expenses, earnings, and cash flow) for the fiscal year in which the acquisition was completed.
Compute the following statistics for each company with no adjustments to earnings for the two most recent fiscal years:
Operating income margin
Net profit margin
Free cash flow
Return on Assets
Return on Equity
Debt-equity ratio
Determine adjustments to earnings-based incorporating the full year results of the acquired company for the two most recent years.
Recalculate the following statistics for each company based the two years of adjusted earnings:
Operating income margin
Net profit margin
Free cash flow
Return on Assets
Return on Equity
Debt-equity ratio
Compare and contrast the impact of the acquisitions on each company’s financial statements and ratios.
Justify your comments using your adjusted earnings and ratios from #9 and #10.
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