Lecture 10-Applying FSA

10
Comprehensive
Case
Steps in Analyzing Financial Statements

Explicitly define the analysis
objectives
Formulate specific questions
and criteria consistent with the
analysis objectives
Identify the most effective and
efficient tools of analysis
Interpret the evidence
Building Blocks of Analysis

Analysis
Analysis emphasizes
emphasizes the
the following
following areas
areas of
of inquirywith
inquirywith varying
varying
degrees
of
importance
degrees of importance
Preliminary
PreliminaryFinancial
FinancialAnalysisIt
AnalysisItimplies
impliesbusiness
business
environment,
companys
structure,
sales
analysis,
environment, companys structure, sales analysis,trends
trendsof
of
development
development(sales,
(sales,assets,
assets,etc.),
etc.),synthetic
syntheticresults.
results.
Short-term
liquidity--Ability
to
meet
short-term
Short-term liquidity--Ability to meet short-termobligations.
obligations.
Cash
flow
and
forecasting--Future
availability
Cash flow and forecasting--Future availability and
and disposition
disposition
of
cash.
of cash.
Capital
Capitalstructure
structureand
andsolvency--Ability
solvency--Abilityto
togenerate
generatefuture
future
revenues
and
meet
long-term
obligations.
revenues and meet long-term obligations.
Return
Returnon
oninvested
investedcapital--Ability
capital--Abilityto
toprovide
providefinancial
financialrewards
rewards
sufficient
to
attract
and
retain
financing.
sufficient to attract and retain financing.
Asset
Assetturnover--Asset
turnover--Assetintensity
intensityin
ingenerating
generatingrevenues
revenuesto
to
reach
a
sufficient
profitability
level.
reach a sufficient profitability level.
Operating
Operatingperformance
performanceand
andprofitability--Success
profitability--Success
at
maximizing
revenues
and
minimizing
at maximizing revenues and minimizing
expenses
expensesfrom
fromoperating
operatingactivities
activities
over
the
long
run.
over the long run.
Reporting on Financial Statement Analysis

Analysis
Analysisreport
reporttypically
typicallycontains
containsat
atleast
leastsix
sixdistinct
distinctsections:
sections:
1.Executive
1.ExecutiveSummary--Brief
Summary--Briefsummary
summaryfocuses
focuseson
onimportant
importantanalysis
analysis
results.
results.
2.Analysis
2.Analysisoverview--Background
overview--Backgroundmaterial
materialon
onthe
thecompany,
company,its
itsindustry,
industry,
and
its
economic
environment.
and its economic environment.
3.Evidential
3.Evidentialmatter--Financial
matter--Financialstatements
statementsand
andinformation
informationused
usedininthe
the
analysis.
This
includes
ratios,
trends,
statistics,
and
all
analytical
analysis. This includes ratios, trends, statistics, and all analytical
measures
measuresassembled.
assembled.
4.Assumptions--Identification
4.Assumptions--Identificationof
ofimportant
importantassumptions
assumptions
regarding
a
companys
industry
and
environment,
regarding a companys industry and environment, and
and other
other important
important
assumptions
for
estimates
or
forecasts.
assumptions for estimates or forecasts.
5.Crucial
5.Crucialfactors--Listing
factors--Listingof
ofimportant
importantfavorable
favorableand
and
unfavorable
factors,
both
quantitative
unfavorable factors, both quantitativeand
andqualitative,
qualitative,
for
forcompany
companyperformanceusually
performanceusuallylisted
listedby
byareas
areasof
of
analysis.
analysis.
6.
6. Inferences--Includes
Inferences--Includesforecasts,
forecasts,estimates,
estimates,interpretations,
interpretations,
and
conclusions
drawing
on
all
four
prior
sections
and conclusions drawing on all four prior sectionsof
ofthe
thereport.
report.
Preliminary Financial Analysis: company overview

Campbell
Campbell isis one
one of
of the
the worlds
worlds largest
largest food
food companies
companies
focusing
on
convenience
foods
for
human
consumption.
focusing on convenience foods for human consumption.
Within
Withineach
eachdivision
divisionthere
thereare
aregroups
groupsand
andbusiness
businessunits
units
The
companys
products
are
mainly
for
home
use,
but
The companys products are mainly for home use, but various
various
items
items are
are also
also manufactured
manufactured for
for restaurants,
restaurants, vending
vending machines,
machines,
and
institutions.
and institutions.
The
The company
company distributes
distributes its
its products
products through
through direct
direct costumer
costumer
sale:
chain
stores,
wholesales.
sale: chain stores, wholesales.
Shipments
Shipments are
are made
made made
made promptly
promptly after
after receipt
receipt and
and
acceptance
acceptance of
of orders
orders as
as reflected
reflected in
in no
no significant
significant backlog
backlog of
of
unfilled
orders.
unfilled orders.
Fiscal
Fiscal Year
Year 11
11 isis aa successful
successful transaction
transaction year
year for
for the
the company.
company.
ItIt completed
completed major
major divestitures
divestitures and
and accomplished
accomplished significant
significant
restructuring
and
reorganization
projects
restructuring and reorganization projects
Preliminary Financial Analysis

Exhibit CC.1
Sales Contribution:
Campbell North America:
Campbell U.S.A
Campbell Canada
CAMPBELL SOUP COMPANY

Sales Contribution and Percent of Sales by Division ($ mil.)
Year 11
Year 10
Year 9
Year 8
$
$
Campbell Biscuit and Bakery:

Pepperidge Farm
International Biscuit
Campbell International
Interdivision
Total sales
Percent of Sales:
Campbell North America:
Campbell U.S.A.
Campbell Canada
Campbell Biscuit and Bakery:
Pepperidge Farm
International Biscuit
Campbell International
Interdivision
Total sales
Year 7
Year 6
3,911.8 $
3,932.7 $
3,666.9 $
3,094.1 $
2,881.4$
2,910.1
352.0
384.0
313.4
313.1
312.8
255.1
4,263.8 $
4,316.7 $
3,980.3 $
3,407.2 $
3,194.2$
3,165.2
$ 569.0
219.4
$ 582.0
195.3
$ 548.4
178.0
$ 495.0
$ 458.5
$ 420.1
$ 788.4
$ 777.3
$ 726.4
$ 495.0
$ 458.5
$ 420.1
1,222.9 $
1,189.8 $
1,030.3 $
1,036.5 $ 897.8
$ 766.2
(71.0)
(78.0)
(64.9)
(69.8)
(60.1)
(64.7)
$
6,204.1 $
6,205.8 $
5,672.1 $
4,868.9 $
4,490.4$
4,286.8
63.0%
5.7
68.7
63.4%
6.2
69.6
64.7%
5.5
70.2
63.6%
6.4
70.0
64.2%
6.9
71.1
67.9%
5.9
73.8
9.2
3.5
12.7
9.4
3.1
12.5
9.7
3.1
12.8
10.2
10.2
10.2
10.2
9.8
9.8
19.7
(1.1)
100.0%
19.2
(1.3)
100.0%
18.2
(1.2)
100.0%
21.3
(1.4)
100.0%
20.0
(1.3)
100.0%
17.9
(1.5)
100.0%

Campbell'
s Sales by Divisions
Biscuit and
bakery
11.6%
International
19.7%
North America
68.7%
Source: Annual Report

Exhibit CC.2
Income Statements (millions)
Year 11
Net sales
$
6,204.1
Costs and expenses:
Cost of products sold
$
4,095.5
Marketing and selling expenses
956.2
Administrative expenses
306.7
Research and development expenses
56.3
Interest expense
116.2
Interest income
(26.0)
Foreign exchange losses, net
0.8
Other expense (income)
26.2
Divestitures, restructuring, & unusual charges 0.0
Total costs and expenses
$
5,531.9
Earnings before equity in affil. & M.I.
$ 672.2
Equity in earnings of affiliates
2.4
Minority interests
(7.2)
Earnings before taxes
$ 667.4
Taxes on earnings
265.9
Earnings before cumulative effect
$ 401.5
Cumulative effect of change for taxes
0
Net earnings
$ 401.5
Earnings per share
$ 3.16
Weighted-average shares outstanding
127.00
Year 10
Year 9
6,205.8 $
4,258.2
980.5
290.7
53.7
111.6
(17.6)
3.3
14.7
339.1
$
6,034.2
$ 171.6
13.5
(5.7)
$ 179.4
175.0
$ 4.4
0
$ 4.4
$ 0.03
126.60
Year 8
5,672.1 $
Year 7
4,868.9 $
4,001.6 $
3,392.8
818.8
733.3
252.1
232.6
47.7
46.9
94.1
53.9
(38.3)
(33.2)
19.3
16.6
32.4
(3.2)
343.0
40.6
$
5,570.7 $
4,480.3
$ 101.4
$ 388.6
10.4
6.3
(5.3)
(6.3)
$ 106.5
$ 388.6
93.4
147.0
$ 13.1
$ 241.6
0
32.5
$ 13.1
$ 274.1
$ 0.10
$ 2.12*
129.30
$129.30
Year 6
4,490.4$
4,286.8
3,180.5$
3,082.7
626.2
544.4
213.9
195.9
44.8
42.2
51.7
56.0
(29.5)
(27.4)
4.8
0.7
(9.5)
5.5
0.0
0.0
$
4,082.9$
3,900.0
$ 407.5
$ 386.8
15.1
4.
(4.7)
(3.9)
$ 417.9
$ 387.2
170.6
164.0
$ 247.3
$ 223.2
0
0
$ 247.3
$ 223.2
$ 1.90
$ 1.72
$129.90
129.50

Exhibit CC.3
Assets
Current assets:
Cash and cash equivalents
Other temporary investments
Accounts receivable
Inventories
Prepaid expenses
Total current assets
Plant assets, net of depreciation
Intangible assets, net of amortization
Other assets
Total assets
Liabilities and Shareowners Equity
Current liabilities:
Notes payable
Payable to suppliers and others
Accrued liabilities
Dividend payable
Accrued income taxes
Total current liabilities
Long-term debt
Other liabilities, mainly deferred tax
Shareowners equity:
Preferred stock; authorized 40,000,000 sh.;
none issued
Capital stock, $0.15 par value;
authorized 140,000,000 sh.;
issued 135,622,676 sh.
Capital surplus
Earnings retained in the business
Capital stock in treasury, at cost
Cumulative translation adjustments
Total shareowners equity
Total liabilities and shareowners equity
Year11
Balance Sheets
$ 178.90
12.80
527.40
706.70
92.70
$
1,518.50
$
1,790.40
435.50
404.60
$
4,149.00
Year 10
Year 9
80.70
22.50
624.50
819.80
118.00
$
1,665.50
$
1,717.70
383.40
349.00
$
4,115.60
$
$
$
$ 282.20
$ 202.30
$
482.40
525.20
408.70
491.90
37.00
32.30
67.70
46.40
$
1,278.00 $
1,298.10 $
$ 772.60
$ 805.80
$
305.00
319.90
20.30
20.30
107.30
61.90
1,912.60
1,653.30
(270.40)
(107.20)
23.60
63.50
$
1,793.40 $
1,691.80 $
$
4,149.00 $
4,115.60 $
Year 8
Year 7
Year 6
120.90
$ 85.80
26.20
35.00
538.00
486.90
816.00
664.70
100.40
90.50
1,601.50 $
1,362.90
1,540.60 $
1,508.90
466.90
496.60
323.10
241.20
3,932.10 $
3,609.60
$ 145.00
$
280.30
338.90
623.60
50.10
$
1,437.90 $
$
1,349.00 $
310.50
$
3,097.40 $
271.50
$ 138.00
508.20
446.70
392.60
236.90
29.70
30.10
41.70
1,232.10 $ 863.30
629.20
$ 525.80
292.50
325.50
20.30
50.80
1,775.80
(70.70)
2.10
1,778.30 $
3,932.10 $
93.50
374.80
182.10
43.40
$ 693.80
$ 380.20
287.30
88.90
321.70
165.90
49.60
$ 626.10
$ 362.30
235.50
20.30
42.30
1,879.10
(75.20)
28.50
1,895.00 $
3,609.60 $
155.10
238.70
299.00
610.50
31.50
1,334.80
1,168.10
259.90
2,762.80
20.30
41.10
1,709.60
(46.80)
11.90
1,736.10 $
3,097.40 $
20.30
38.10
1,554.00
(48.40)
(25.10)
1,538.90
2,762.80

Exhibit CC.8

Accounts receivable
Temporary investments
Inventory
Working capital
Plant assets, net
Other assets
Long-term debt
Total liabilities
Shareowners equity
Net sales
Admin. and research expenses
Marketing and sales expenses
Interest expense
Net income

Trend Index of Selected Accounts
(Year 6 = 100)
Year 11
Year 10
Year 9
Year 8
115%
176
5
116
114
204
34
153
156
213
192
117
52%
209
9
134
125
207
52
147
134
222
198
110
78%
180
11
134
120
197
52
132
124
174
176
116
55%
163
15
109
102
138
70
129
93
145
140
123
145
133
157
176
199
142
172
180
145
138
148
180
191
155
46
-102*
132
130
129
150
161
143
28
-104*
114
110
119
135
104
115
100
123
Year 7
Year 6 ($)
93%
113
117
102
108
111
105
115
119
105
111
113
$155.1
299.0
238.7
610.5
1,334.8
626.1
708.7
1,168.1
259.9
362.3
1,223.9
1,538.9
105
103
109
115
101
105
108
111
4,268.8
3,082.7
195.9
544.4
58.5
3,900.0
387.2
223.2

Exhibit CC.9

Per Share Results
Year 11 Year 10 Year 9 Year 8 Year 7 Year 6
Sales
$48.85
Net income
3.16
Dividends
1.12
Book value
14.12
Average shares outstanding (mil.)
127.0
$47.88
0.03
0.98
13.09
$43.87
0.10
0.90
13.76
$37.63
2.12
0.81
14.69
$34.57
1.90
0.71
13.35
$33.10
1.72
0.65
11.86
129.6
129.3
129.4
129.9
129.5

Exhibit CC.5
Per share
Sales
Net income
Dividends
Equity
Per share
Sales
Net income
Dividends
Equity

Five-Year Growth Rates*
Years 6 to 11
Average for
Average for
[Years 6 to 8] to [Years 9 to 11 ]
8.09%
12.93
11.50
3.55
5.95%
-10.53
6.69
0.53
Ten-Year Growth Rates*

Years 1 to 11
Average for
Average for
[Years 1 to 3] to [Years 9 to 11 ]
8.51%
12.19
8.18
6.22
7.22%
-0.44
6.62
5.13
* Growth rates (annually compounded) are computed using the compound interest method:
FV = PV (1+r/100)^n

Campbell'
s Five-Year Growth Rates
Equity
Dividends
Income
Sales
0
10
12
14
Percent

Exhibit CC.4
Statements of Cash Flows
For Years 6 to 11 ($ millions)

Year 11 Year 10 Year 9
Year 8
Cash flows from operating activities:

Net earnings
$401.5
$ 4.4
To reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
208.6
200.9
Divestitures and restructuring provisions
339.1
Deferred taxes
35.5
3.9
Other, net
63.2
18.6
Cumulative effect of accounting change
(Increase) decrease in accounts receivable

17.1
(60.4)
(Increase) decrease in inventories
48.7
10.7
Net change in other current assets and liabilities
30.6
(68.8)
Net cash provided by operating activities
$805.2
$448.4
Cash flows from investing activities:
Purchases of plant assets
$(361.1)
$(387.6)
Sale of plant assets
43.2
34.9
Businesses acquired
(180.1)
(41.6)
Sale of businesses
67.4
21.7
Increase in other assets
(57.8)
(18.6)
Net change in other temporary investments
9.7
3.7
Net cash used in investing activities
$(478.7)
$(387.5)
Cash flows from financing activities:
Long-term borrowings
$402.8
$ 12.6
Repayments of long-term borrowings
(129.9)
(22.5)
Increase (decrease) in short-term borrowings*
(137.9)
(2.7)
Other short-term borrowings
117.3
153.7
Repayments of other short-term borrowings
(206.4)
(89.8)
Dividends paid
(137.5)
(124.3)
Treasury stock purchases
(175.6)
(41.1)
Treasury stock issued
47.7
12.4
Other, net
(0.1)
(0.1)
Net cash provided (used in) financing activities
$(219.6)
$(101.8)
Effect of exchange rate change on cash
$ (8.7)
$ 0.7
Net increase (decrease) in cash and cash equivalents 98.2
(40.2)
Cash and cash equivalents at the beginning of year
80.7
120.9
Cash and cash equivalents at end of year
$178.9
$ 80.7
Year 7
Year 6
Total
$ 13.1
$274.1
$247.3
$223.2
192.3
343.0
(67.8)
37.3
(46.8)
(113.2)
(0.6)
$ 357.3
170.9
17.6
13.4
43.0
(32.5)
(104.3)
54.2
30.2
$466.6
144.6
45.7
28.0
(36.3)
(3.9)
42.9
$468.3
126.8
29.0
16.6
(3.6)
23.1
48.7
$463.8
1,044.1
699.7
59.7
206.7
(32.5)
(234.3)
19.6
83.0
$
3,009.6
1,163.6
$(284.1)
39.8
(135.8)
4.9
(107.0)
9.0
$(473.2)
$(245.3)
22.6
(471.9)
23.5
(40.3)
249.2
$(462.2)
$(303.7)
(7.3)
20.8
(50.1)
(60.7)
$(401.0)
$(235.3)
29.8
(20.0)
(18.0)
(144.1)
$(387.6)
$ 126.5
(53.6)
108.2
227.1
(192.3)
(86.7)
(8.1)
18.5
23.5
$ 163.1
$ (12.1)
35.1
85.8
$ 120.9
$103.0
(22.9)
8.4
77.0
(87.6)
(104.6)
(29.3)
0.9
2.3
$(52.8)
$(10.8)
(59.2)
145.0
$ 85.8
$ 4.8
(23.9)
(20.7)
89.3
(66.3)
(91.7)
1.6
18.6
$(88.3)
$ (7.1)
(28.1)
173.1
$145.0
$203.9
(164.7)
4.6
72.9
(88.5)
(104.6)
4.0
17.9
$(54.5)
$ (3.7)
18.0
155.1
$173.1
$ 853.6
(417.5)
(40.1)
737.3
(730.9)
(649.4)
(254.1)
85.1
62.1
$ (353.9)
$ (41.7)
23.8
760.6
$ 784.4
(1,817.1)
170.3
(856.7)
138.3
(291.8)
66.8
$
(2,590.2)
Cash Flow Analysis and Forecasting

Campbell's Operating Cash Flow
11
Year
10
9
8
7
6
0
200
400
600
800
1000
$ Millions

Exhibit CC.10
Common-Size Statements of Cash Flows*

Year 11
Year 10
Cash flows from operating activities:

Net earnings
26.89%
0.54%
To reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
13.97
24.58
Divestitures and restructuring provisions
41.49
Deferred taxes
2.38
0.48
Other, net
4.23
2.28
Cumulative effect of accounting change
(Increase) decrease in accounts receivable

1.15
(7.39)
(Increase) decrease in inventories
3.26
1.31
Net change in other current assets & liabilities
2.05
(8.42)
Net cash provided by operating activities
53.92%
54.86%
Cash flows from investing activities:
Purchase of plant assets
(24.18)%
(47.42)%
Sale of plant assets
2.89
4.27
Businesses acquired
(12.06)
(5.09)
Sale of businesses
4.51
2.66
Increase in other assets
(3.87)
(2.28)
Net change in other temporary investments
0.65
0.45
Net cash used in investing activities
(32.06)%
(47.41)%
Cash flows from financing activities:
Long-term borrowings
26.97%
1.54%
Repayments of long-term borrowings
(8.70)
(2.75)
Increase (decrease) in short-term borrowings
(9.23)
(0.33)
Other short-term borrowings
7.86
18.81
Repayments of other short-term borrowings
(13.82)
(10.99)
Dividends paid
(9.21)
(15.21)
Treasury stock purchases
(11.76)
(5.03)
Treasury stock issued
3.19
1.52
Other, net
(0.01)
(0.01)
Net cash provided (used in) financing activities (14.71)%
(12.46)%
Effect of exchange rate change on cash
(0.58)%
0.09%
Net increase (decrease) in cash & equivalents
6.58
(4.92)
Year 9
1.15%
16.82
30.00
(5.93)
3.26
(4.09)
(9.90)
(0.05)
31.25%
Year 8
Year 7
Year 6
Total
25.14%
38.42%
27.88%
21.54%
15.67
1.61
1.23
3.94
(2.98)
(9.57)
4.97
2.77
42.80%
22.47
7.10
4.35
(5.64)
(0.61)
6.67
72.76%
15.84
3.62
2.07
(0.45)
2.89
6.08
57.94%
19.33
12.95
1.11
3.83
(0.60)
(4.34)
0.36
1.54
55.72%
(24.85)% (22.50)%
3.48
2.07
(11.88)
(43.28)
0.43
2.16
(9.36)
(3.70)
0.79
22.86
(41.39)% (42.39)%
(47.19)%
(1.13)
3.23
(7.78)
(9.43)
(62.31)%
(29.39)%
3.72
(2.50)
(2.25)
(18.00)
(48.42)%
(33.64)%
3.15
(15.86)
2.56
(5.40)
1.24
(47.95)%
11.07% 9.45%
(4.69)
(2.10)
9.46
0.77
19.87
7.06
(16.82)
(8.03)
(7.58)
(9.59)
(0.71)
(2.69)
1.62
0.08
2.06
0.21
14.27%
(4.84)%
(1.06)% (0.99)%
3.07
(5.43)
0.75%
(3.71)
(3.22)
13.88
(10.30)
(14.25)
0.25
2.89
(13.72)%
(1.10)%
(4.37)
25.47%
(20.57)
0.57
9.11
(11.06)
(13.07)
0.50
2.24
(6.81)%
(0.46)%
2.25
15.80%
(7.73)
(0.74)
13.65
(13.53)
(12.02)
(4.70)
1.58
1.15
(6.55)%
(0.77)%
0.44

Summary of cash inflows and outflows by major categories
Year 11 Year 10
Operating activities
$ 805.2 $448.4
Investing activities
(478.7) (387.5)
Financing activities
(219.6) (101.8)
Increase (decrease) in cash
98.2
(40.2)
Year 9
Year 8
Year 7
Year 6
Total
$357.3
(473.2)
(163.1)
35.1
$466.6
(462.2)
(52.8)
(59.2)
$468.3
(401.0)
(88.3)
(28.1)
$463.8
(387.6)
(54.5)
18.0
$ 3,009.6
(2,590.2)
(353.9)
23.8

Exhibit CC.11

Analysis of Cash Flow Ratios ($ millions)
(1) + ! 1 4 ( 30 *
2=
=
0# 1
&
+ !
$$% + "
0# 1 0
/ ( 0
-+.
!1 #
* ((
!(
( (
-+
=
+ !
, =
(2)
=
=
=
=
=
=
=
( ( )*
+
#
+
!,
' ( (
+
=
=
=
=
=
=
*All amounts are from the statement of cash flows.

Numerator amounts are form the statement of cash flows and
denominator amounts are from the balance sheet
Short-Term Analysis
Exhibit CC.12
Units
Short-Term Liquidity Analysis

Measure
Current ratio
1. Ratio
2. Ratio
Acid-test ratio
3. Times
Accounts receivable turnover
4. Times
Inventory turnover
5. Days
Days sales in receivables
6. Days
Days sales in inventory
7. Days
Approximate conversion period
8. Percent
Cash to current assets
9. Percent
Cash to current liabilities
11. M$s
Working capital
12. Days Days purchases in accounts payable
13. Days
Average net trade cycle
14. Percent CFO to average current liabilities
Year 11 Year 10
Year 9
Year 8
Year 7
Year 6
Year 11
Industry
Composite
1.19
0.56
10.77
5.37
30.60
62.12
92.72
11.78%
14.00%
240.50
46.03
46.69
62.51%
1.30
0.56
11.07
5.41
34.15
73.41
107.56
7.55%
9.81%
369.40
46.20
61.36
34.10%
1.58
0.70
11.79
5.27
36.00
70.53
106.53
6.30%
9.94%
499.60
49.30
57.23
60.22%
2.07
1.10
14.08
5.15
27.17
70.59
97.76
10.14%
20.90%
744.10
44.25
53.51
71.36%
2.13
1.11
15.13
5.14
25.11
71.29
96.40
11.62%
24.77%
708.70
39.33
57.07
77.34%
1.86
0.61
8.37
2.53
43.01
142.03
185.32
5.60%
10.40%
54.33
1.28
0.56
10.68
5.21
36.23
69.31
105.54
4.84%
6.22%
367.40
46.56
58.98
35.44%
Short term analysis

Exhibit CC.8

Accounts receivable
Inventory
Working capital
Plant assets, net
Other assets
Long-term debt
Total liabilities
Shareowners equity
Net sales
Interest expense
Net income

(Year 6 = 100)
Year 11
Year 10
Year 9
Year 8
115%
176
5
116
114
204
34
153
156
213
192
117
52%
209
9
134
125
207
52
147
134
222
198
110
78%
180
11
134
120
197
52
132
124
174
176
116
55%
163
15
109
102
138
70
129
93
145
140
123
145
133
157
176
199
142
172
180
145
138
148
180
191
155
46
-102*
132
130
129
150
161
143
28
-104*
114
110
119
135
104
115
100
123
Year 7
Year 6
93%
113
117
102
108
111
105
115
119
105
111
113
$155.1
299.0
238.7
610.5
1,334.8
626.1
708.7
1,168.1
259.9
362.3
1,223.9
1,538.9
105
103
109
115
101
105
108
111
4,268.8
3,082.7
195.9
544.4
58.5
3,900.0
387.2
223.2
Short term analysis

Exhibit CC.13

Common-Size Analysis of
Current Assets and Current Liabilities
Year 11
Year 10 Year 9
Year 8
Current assets:
Accounts receivable
Inventories
Prepaid expenses
7.55%
1.64
33.59
50.95
6.27
6.30%
2.57
35.72
48.77
6.64
Year 7
10.09%
19.49
23.57
43.37
3.48
Year 6
Year 11
Industry
Composite
11.78%
0.84
34.73
46.54
6.11
4.85%
1.35
37.50
49.22
7.08
11.62% 5.60%
17.88
22.40
27.18
45.74
63.60
2.36
3.62
100.00%
100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Notes payable
22.08%
Payable to suppliers and others 37.75
Accrued liabilities
31.98
Dividend payable
2.89
5.30
15.58%
40.46
37.89
2.49
3.58
100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
100.00%
22.04%
41.25
31.86
2.41
2.44
15.99%
51.74
27.44
4.83
13.48%
54.02
26.25
6.25
14.20% 20.49%
51.38
31.19
26.50
=48.32
7.92
Short-Term Analysis
Exhibit CC.12
Units

Measure
1. Ratio
Current ratio
2. Ratio
Acid-test ratio
3. Times
4. Times
Inventory turnover
5. Days
6. Days
7. Days
8. Percent
9. Percent
10. Days
Liquidity index
11. M$s
Working capital
13. Days
14. Percent
Year 11 Year 10
Year 9
Year 8
Year 7
Year 6
Year 11
Industry
Composite
1.19
0.56
10.77
5.37
30.60
62.12
92.72
11.78%
14.00%
59.87
240.50
1.30
0.56
11.07
5.41
34.15
73.41
107.56
7.55%
9.81%
72.55
369.40
1.58
0.70
11.79
5.27
36.00
70.53
106.53
6.30%
9.94%
71.46
499.60
2.07
1.10
14.08
5.15
27.17
70.59
97.76
10.14%
20.90%
52.29
744.10
2.13
1.11
15.13
5.14
25.11
71.29
96.40
11.62%
24.77%
52.07
708.70
1.86
0.61
8.37
2.53
43.01
142.03
185.32
5.60%
10.40%
130.62
54.33
44.25
53.51
71.36%
39.33
57.07
77.34%
1.28
0.56
10.68
5.21
36.23
69.31
105.54
4.84%
6.22%
72.62
367.40
46.03
46.56
Average net trade cycle 46.69
58.98
CFO to average current liabilities 62.51% 35.44%
46.20
49.30
61.36 57.23
34.10% 60.22%
Short-Term analysis
Exhibit CC.13

Common-Size Analysis of
Current Assets and Current Liabilities
Year 11
Year 10 Year 9
Year 8
Current assets:
Accounts receivable
Inventories
Prepaid expenses
7.55%
1.64
33.59
50.95
6.27
6.30%
2.57
35.72
48.77
6.64
Year 7
10.09%
19.49
23.57
43.37
3.48
Year 6
Year 11
Industry
Composite
11.78%
0.84
34.73
46.54
6.11
4.85%
1.35
37.50
49.22
7.08
11.62% 5.60%
17.88
22.40
27.18
45.74
63.60
2.36
3.62
100.00%
100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Notes payable
22.08%
Payable to suppliers and others37.75
Accrued liabilities
31.98
Dividend payable
2.89
5.30
15.58%
40.46
37.89
2.49
3.58
100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
100.00%
22.04%
41.25
31.86
2.41
2.44
15.99%
51.74
27.44
4.83
13.48%
54.02
26.25
6.25
14.20% 20.49%
51.38
31.19
26.50
=48.32
7.92
Short-Term Analysis
Exhibit CC.12
Units

Measure
1. Ratio
Current ratio
2. Ratio
Acid-test ratio
3. Times
4. Times
Inventory turnover
5. Days
6. Days
7. Days
8. Percent
9. Percent
10. Days
Liquidity index
11. M$s
Working capital
13. Days
14. Percent
Year 11 Year 10
Year 9
Year 8
Year 7
Year 6
Year 11
Industry
Composite
1.19
0.56
10.77
5.37
30.60
62.12
92.72
11.78%
14.00%
59.87
240.50
1.30
0.56
11.07
5.41
34.15
73.41
107.56
7.55%
9.81%
72.55
369.40
1.58
0.70
11.79
5.27
36.00
70.53
106.53
6.30%
9.94%
71.46
499.60
2.07
1.10
14.08
5.15
27.17
70.59
97.76
10.14%
20.90%
52.29
744.10
2.13
1.11
15.13
5.14
25.11
71.29
96.40
11.62%
24.77%
52.07
708.70
1.86
0.61
8.37
2.53
43.01
142.03
185.32
5.60%
10.40%
130.62
54.33
44.25
53.51
71.36%
39.33
57.07
77.34%
1.28
0.56
10.68
5.21
36.23
69.31
105.54
4.84%
6.22%
72.62
367.40
46.03
46.56
58.98
CFO to average current liabilities 62.51% 35.44%
46.20
49.30
61.36 57.23
34.10% 60.22%

Exhibit CC.8

Accounts receivable
Inventory
Working capital
Plant assets, net
Other assets
Long-term debt
Total liabilities
Shareowners equity
Net sales
Interest expense
Net income

(Year 6 = 100)
Year 11
Year 10
Year 9
Year 8
115%
176
5
116
114
204
34
153
156
213
192
117
52%
209
9
134
125
207
52
147
134
222
198
110
78%
180
11
134
120
197
52
132
124
174
176
116
55%
163
15
109
102
138
70
129
93
145
140
123
145
133
157
176
199
142
172
180
145
138
148
180
191
155
46
-102*
132
130
129
150
161
143
28
-104*
114
110
119
135
104
115
100
123
Year 7
Year 6
93%
113
117
102
108
111
105
115
119
105
111
113
$155.1
299.0
238.7
610.5
1,334.8
626.1
708.7
1,168.1
259.9
362.3
1,223.9
1,538.9
105
103
109
115
101
105
108
111
4,268.8
3,082.7
195.9
544.4
58.5
3,900.0
387.2
223.2
Short-Term analysis
Inventory Data ($ mil.)
Exhibit CC.14
Year 11
Year 10
Year 9
Year 8
Year 7
Year 6
1.Beginning inventory
2.Plus: production inputs
$ 819.8
3,982.4
$ 816.0
4,262.0
$ 664.7
4,152.9
$ 623.6
3,433.9
$ 610.5
3,193.6
$ 623.1
3,070.1
3.Goods available for sale

4.Less: Ending inventory
$ 4,802.2
706.7
$ 5,078.0
819.8
$ 4,187.6
816.0
$ 4,057.5
664.7
$ 3,804.1
623.6
$ 3,693.2
610.5
5.Cost of products sold
$ 4,095.5
$ 4,258.2
$ 4,001.6
$ 3,392.8
$ 3,180.5
$ 3,082.7
6.Depreciation
7.(2) (6) = Purchases
8.(7)/360 = Purchases per day
$ 208.6
3,773.8
$10.48
200.9
4,061.1
$
11.28
192.3
3,960.6
$ 11.00
$ 170.9
3,263.0
$ 9.06
$ 144.6
3,049.0
$ 8.47
$ 126.8
2,943.3
$ 8.18
Ending inventories:
Raw materials, containers, and supplies
Finished products
$ 342.3
454.0
$ 384.4
520.0
$ 385.0
519.0
$ 333.4
412.5
$ 333.6
372.4
$ 340.4
348.1
Less: Adjustment of inventories to LIFO
$ 796.3
89.6
$ 904.4
84.6
$ 904.0
88.0
$ 745.9
81.2
$ 706.0
82.4
$ 688.5
78.5
Total ending inventories

$ 706.7
Raw materials, containers, and supplies
43.0%
Finished products
57.0
$ 819.8
42.5%
57.5
$ 816.0
42.6%
57.4
$ 664.7
44.7%
55.3
$ 623.6
47.3%
52.7
$ 610.5
49.4%
50.6
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Short-Term Analysis
Exhibit CC.12

Units
1. Ratio
2. Ratio
3. Times
4. Times
Measure
Year 11 Year 10
Current ratio 1.19

Acid-test ratio 0.56
Accounts receivable turnover 10.77
Year 8
Year 7
Year 6
Year 11
Industry
Composite
1.30
1.58
2.07
2.13
1.86
1.28
0.56
0.56
0.70
1.10
1.11
0.61
10.68
11.07
11.79
14.08
15.13
8.37
5.21
5.41
5.27
5.15
5.14
2.53
5. Days
Days sales in receivables 30.60
36.23
34.15
36.00
27.17
25.11
43.01
6. Days
Days sales in inventory 62.12
69.31
73.41
70.53
70.59
71.29
142.03
7. Days
Inventory turnover 5.37
Year 9
105.54
107.56
106.53
97.76
96.40
185.32
8. Percent
Cash to current assets 11.78%
4.84%
7.55%
6.30%
10.14%
11.62%
5.60%
9. Percent
Cash to current liabilities 14.00%
6.22%
9.81%
9.94%
20.90%
24.77%
10.40%
367.40
369.40 499.60
744.10
708.70
54.33
11. DaysDays purchases in accounts payable46.03
46.56
46.20
49.30
44.25
39.33
12. Days
58.98
61.36
57.23
53.51
57.07
71.36%
77.34%
10. M$s
92.72
Working capital 240.50

13. PercentCFO to average current liabilities 62.51% 35.44%
34.10% 60.22%
Short-Term liquidity: summary and inferences

Assessment
Assessmentof
ofshort-term
short-termliquidity
liquidityisismixed:
mixed:
1.Both
1.Both current
current and
and acid-test
acid-test ratio
ratio worsened
worsened and
and not
not favorable
favorable
comparing
comparingwith
withindustry
industryaverage.
average.
2.Cash
2.Cashposition
positioncompares
comparesfavorably
favorablywith
withits
itsindustry.
industry.
3.Account
3.Account receivables
receivables and
and inventory
inventory turnovers
turnovers improving
improving
(inventory)
(inventory)and
and(both)
(both)better
betterthan
thanindustry
industrynorms.
norms.
4.Conversion
4.ConversionperiodBetter
periodBetterthan
thanthat
thatof
ofthe
theindustry
industry
5.Cash
5.Cash flows
flows position
position strong,
strong, allowing
allowing the
the company
company to
to be
be used
used for
for
non-operating
non-operatingactivities
activitieslike
likeacquisitions
acquisitionsand
andretirement
retirementof
ofdebt
debt
Building Blocks of Analysis

Analysis
Analysis emphasizes
emphasizes the
the following
following areas
areas of
of inquirywith
inquirywith varying
varying
degrees
of
importance
degrees of importance
Preliminary
PreliminaryFinancial
FinancialAnalysisIt
AnalysisItimplies
impliesbusiness
business
environment,
companys
structure,
sales
analysis,
environment, companys structure, sales analysis,trends
trendsof
of
development
development(sales,
(sales,assets,
assets,etc.),
etc.),synthetic
syntheticresults.
results.
Short-term
liquidity--Ability
to
meet
short-term
Short-term liquidity--Ability to meet short-termobligations.
obligations.
Cash
flow
and
forecasting--Future
availability
Cash flow and forecasting--Future availability and
and disposition
disposition
of
cash.
of cash.
Capital
Capitalstructure
structureand
andsolvency--Ability
solvency--Abilityto
togenerate
generatefuture
future
revenues
and
meet
long-term
obligations.
revenues and meet long-term obligations.
Return
Returnon
oninvested
investedcapital--Ability
capital--Abilityto
toprovide
providefinancial
financialrewards
rewards
sufficient
to
attract
and
retain
financing.
sufficient to attract and retain financing.
Asset
Assetturnover--Asset
turnover--Assetintensity
intensityin
ingenerating
generatingrevenues
revenuesto
to
reach
a
sufficient
profitability
level.
reach a sufficient profitability level.
Operating
Operatingperformance
performanceand
andprofitability--Success
profitability--Success
at
maximizing
revenues
and
minimizing
at maximizing revenues and minimizing
expenses
expensesfrom
fromoperating
operatingactivities
activities
over
the
long
run.
over the long run.
Capital Structure and Solvency

Exhibit CC.16
Analysis of Capital Structure (mil.)
Year 11
Year 10
Year 9
Year 8
Year 7
Year 6
$757.8
14.8
$792.9
12.9
$610.3
18.9
$507.1
18.7
$358.8
21.4
$346.7
15.6
Total long-term debt

Deferred income taxes*
Other long-term liabilities
$772.6
129.3
23.0
$805.8
117.6
28.5
$629.2
109.0
19.6
$525.8
140.3
15.6
$380.2
124.0
15.8
$362.3
99.6
16.3
Total long-term liabilities

Current liabilities
$924.9
1,278.0
$951.9
1,298.1
$757.8
1,232.1
$681.7
863.3
$520.0
693.8
$478.2
626.1
$2,202.9
$2,250.0
$1,989.9
$ 1,545.0 $ 1,213.8
$ 1,104.
$1,793.4
23.5
129.2
$1,691.8
56.3
117.5
$1,778.3
54.9
109.0
$1,895.0
29.3
140.3
$1,736.1
23.5
124.0
$ 1,538.9
20.1
99.5
Total equity capital
$ 1,946.1
$ 1,865.6
$ 1,942.2
$ 2,064.6
$ 1,883.6
$ 1,658.5
Total liabilities and equity
$ 4,149.0
$ 4,115.6
$ 3,932.1
$ 3,609.6
$ 2,097.4
$ 2,762.8
Long-term liabilities:
Notes payable
Capital lease obligation
Total liabilities
Equity capital:
Common shareholders equity
Minority interests

Campbell'
s Financing Sources
Noncurrent
liabilities
22.3%
Equity
46.9%
Current
Liabilities
30.8%

Exhibit CC.17
Long-term liabilities:
Notes payable
Capital lease obligation

Common-Size Analysis of Capital Structure
Year 11
Year 10
Year 9
Year 8
Year 7
Year 6
18.26%
0.36
19.27%
0.31
15.52%
0.48
14.05%
0.52
11.59%
0.69
12.55%
0.56
Total long-term debt

Other long-term liabilities
Total long-term liabilities
Current liabilities
Total liabilities
18.62%
3.12
0.55
22.29%
30.80
53.09%
19.58%
2.86
0.69
23.13%
31.54
54.67%
16.00%
2.77
0.50
19.27%
31.34
50.61%
14.57%
3.88
0.43
18.88%
23.92
42.80%
12.28%
4.00
0.51
16.79%
22.40
39.19%
13.11%
3.61
0.59
17.31%
22.66
39.97%
Equity capital:
Common shareholders equity
Minority interests
43.22%
0.57
3.12
41.11%
1.37
2.85
45.22%
1.40
2.77
52.50%
0.81
3.89
56.05%
0.76
4.00
55.70%
0.73
3.60
Total equity capital
46.91%
45.33%
49.39%
57.20%
60.81%
60.03%
100.00%
100.00%
100.00%
100.00% 100.00% 100.00%

Exhibit CC.18
Capital Structure and Solvency Ratios
Year 11 Year 10 Year 9 Year 8 Year 7
Year 6 Year 11
Industry
Composite
1.Total debt to equity
1.13
1.21
1.02
0.75
0.64
0.67
1.17
2.Total debt ratio
0.53
0.55
0.51
0.43
0.39
0.40
0.54
3.Long-term debt to equity
0.48
0.51
0.39
0.33
0.28
0.29
0.43
4.Equity to total debt
0.88
0.83
0.98
1.34
1.56
1.50
0.86
5.Fixed assets to equity
0.92
0.92
0.79
0.73
0.72
0.70
0.46
6.Current liabilities to total liabilities 0.58
0.58
0.62
0.56
0.58
0.57
0.61
7.Earnings to fixed charges
5.16
2.14
1.84
6.06
6.41
6.28
8.Cash flow to fixed charges
7.47
5.27
5.38
8.94
8.69
9.26

Exhibit CC.7

Common-Size Balance Sheets
Year 8
Current assets:
4.31%
0.31
Accounts receivable
12.71
Inventories
17.03
Prepaid expenses
2.23
36.60%
43.15%
10.50
Other assets
9.75
Total assets
100.00%
Notes payable
6.80%
11.63
Accrued liabilities
9.85
Dividend payable
0.89
1.63
30.80%
Long-term debt
18.62%
Other liabilities, mainly deferred taxes
7.35
Shareowners equity:
Preferred stock; auth 40,000,000 sh.; none issued
Capital stock, $0.15 par value; authorized 140,000,000 sh.;
issued 135,622,676 sh.
0.49
Capital surplus
2.59
46.10
6.52
0.57
43.22%
100.00%
Year 7
Year 6
1.96%
0.55
15.17
19.92
2.87
40.47%
41.74%
9.32
8.48
100.00%
3.07%
0.67
13.68
20.75
2.55
40.73%
39.18%
11.87
8.22
100.00%
2.38% 4.69%
0.97
9.05
13.49
10.94
18.41
20.13
2.51
1.62
37.76% 46.43%
41.80% 43.55%
13.76
6.68
10.02
100.00%100.00%
5.61%
8.64
10.82
22.10
1.14
48.31%
42.28%
9.41
100.00%
4.92%
12.76
11.95
0.78
1.13
31.54%
19.58%
7.77
6.90%
12.92
9.98
0.76
0.77
31.33%
16.00%
7.44
3.82%
12.38
6.56
1.16
23.92%
14.57%
9.02
3.02%
12.10
5.88
1.40
22.40%
12.27%
9.28
3.22%
11.64
6.00
1.80
22.66%
13.11%
8.52
0.49
1.50
40.17
2.60
1.54
41.11%
100.00%
0.52
1.29
45.16
1.80
0.05
45.23%
100.00%
0.56
0.66
1.17
1.33
52.06
55.19
2.08
1.51
0.79
0.38
52.50% 56.05%
100.00%100.00%
Industry Composite
Year 11
3.4%
16.5
38.6
2.2
60.70%
21.0%
18.3
100.00%
6.7%
10.2
15.8
32.70%
19.7%
1.5
0.73
1.38
56.25
1.75
0.91
55.70% 46.10%
100.00% 100.00%
Capital structure and Solvency: summary and inferences
1.Less
1.Less conservative
conservative capital
capital structure
structure total
total liabilities
liabilities make
make up
up about
about
53%
53% of
of total
total financing
financing and
and long-term
long-term liabilities
liabilities equal
equal about
about one-half
one-half of
of
equity,
equity,allying
allyingits
itscapital
capitalstructure
structureto
tothe
theindustry
industrynorms
norms..
2.Earnings
2.Earnings to
to fixed
fixed charges
charges and
and cash
cash flow
flow to
to fixed
fixed charges
charges are
are
strong
strongthis
thisimplies
impliesgood
goodprotection
protectionfor
forCampbells
Campbellscreditors.
creditors.
3.Strength
3.Strength to
to take
take additional
additional debt
debt despite
despite aa riskier
riskier capital
capital structure
structure
the
the market
market continues
continues to
to assign
assign Campbell
Campbell aa good
good credit
credit rating
rating (AA
(AA from
from
AAA)
AAA)
Return on Invested Capital

Exhibit CC.19
Return on Invested Capital Ratios
Year 11 Year 10* Year 9*
Year 8

Industry
Composite
11.75% 2.08%
2.13%
9.42%
9.57%
21.52% 0.24%
0.67%
14.07% 14.14% 14.40% 19.80%
3.Return on long-term debt

and equity
17.07% 3.04%
2.96%
12.27% 12.35% 12.90% 13.50%
4.Financial leverage index

(ROCE ROA)
1.83
0.31
1.49
1.48
1.46
-3.67%
8.59%
8.79%
8.96%
1.Return on assets (ROA)

2.Return on common
equity* (ROCE)*
5.Equity growth rate
0.12
13.85% -6.30%
9.90% 9.20%
2.15
6.Disaggregation of return on common equity*

Adjusted profit margin
Asset turnover
Financial leverage ratio
6.47% 0.07%
0.23%
5.63% 5.51% 5.10% 6.60%
x
x
x
x
x
x
x
1.50
1.54
1.50
1.45
1.53
1.68
1.38
x
x
x
x
x
x
x
2.22
2.18
1.92
1.72
1.68
1.68
2.17
21.52% 0.24%
0.67%
14.07% 14.14% 14.40% 19.80%

Exhibit CC.6
Common-Size Income Statements
Year 11
Year 10
Year 9
Net sales
Costs and expenses:
Interest expense
Interest income
Divestitures, restructuring & unusual charges
Earnings before equity in earnings of
affiliates and minority interests
Minority interests
Taxes on earnings
of accounting change
Cumulative effect of change in
accounting for income taxes
Net earnings
Year 8
Year 7
Year 6
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
66.01%
15.41
4.94
0.91
1.87
(0.42)
0.01
0.42
89.17%
68.62%
15.80
4.68
0.87
1.80
(0.28)
0.05
0.24
5.46
97.23%
70.55%
14.44
4.44
0.84
1.66
(0.68)
0.34
0.57
6.05
98.21%
69.68%
15.06
4.78
0.96
1.11
(0.68)
0.34
(0.07)
0.83
92.02%
70.83%
13.95
4.76
1.00
1.15
(0.66)
0.11
(0.21)
90.93%
71.91%
12.70
4.57
0.98
1.31
(0.64)
0.02
0.13
90.98%
10.83%
0.04
(0.12)
10.76%
4.29
2.77%
0.22
(0.09)
2.89%
2.82
1.79%
0.18
(0.09)
1.88%
1.65
7.98%
0.13
(0.13)
7.98%
3.02
9.07%
0.34
(0.10)
9.31%
3.80
9.02%
0.10
(0.09)
9.03%
3.83
6.47%
0.07%
0.23%
4.96%
5.51%
5.21%
6.47%
0.07%
0.23%
0.67
5.63%
5.51%
5.21%

Campbell's Financial Leverage
11
Year
10
9
8
7
6
0
0.5
1.5
Leverage Ratio
2.5
Return on Invested Capital: summary and inferences

1.
1.Return
Returnon
onAssets
AssetsItItisisvariable.
variable.In
InYY66through
throughYY88isisstable
stablearound
around9.5%;
9.5%;inin
YY99and
and10
10ititdeclines
declinesdue
dueprimarily
primarilytotodivestitures,
divestitures,restructuring
restructuringand
andunusual
unusual
charges.
charges.InInYY11
11ititrebounds
reboundstotoaastrong
strong11,75%,
11,75%,comparing
comparingfavorably
favorablytotothe
the
industry
industryaverage
averageof
of9.2%
9.2%
2.
2. Return
Return on
on Equity
Equity itit isis 21,52%
21,52% inin YY 11
11 and
and exceeds
exceeds the
the industry
industry norms
norms of
of
19.8%
19.8%
3.
3. Financial
Financialleverage
leverageImportant
Importantfactor
factoraffecting
affectingreturn
returnon
oncommon
commonequity.
equity.ItItisis
2.22
2.22 inin YY 11
11 and
and higher
higher than
than prior
prior years
years mainly
mainly due
due toto aa more
more risky
risky capital
capital
structure.
structure.
4.
4. Equity
Equitygrowth
growthrate
ratehas
hasmarkedly
markedlyincreased
increasedininYY11
11(13,85%)
(13,85%)due
duetotostrong
strong
earnings
earnings and
and aa higher
higher rate
rate of
of earning
earning retention.
retention. Negative
Negative ratios
ratios for
for Y9
Y9 and
and
Y10
Y10are
arebecause
becauseCampbell
Campbellmaintained
maintained its
its dividend
dividend payout
payout with
with its
its divesture
divesture
and
andrestructuring.
restructuring.
Asset Utilization
Exhibit CC.20
Asset Utilization Ratios
Year 11 Year 10 Year 9 Year 8
Year 7
Year 6
Year 11
Industry
Composite
1.Sales to cash and equivalents 34.7
76.9
46.9
56.8
31.0
27.6
40.6
2.Sales to receivables
11.8
9.9
10.5
10.0
13.2
14.3
8.4
3.Sales to inventories
8.8
7.6
7.0
7.3
7.2
7.0
3.6
4.Sales to working capital
25.8
16.9
15.4
9.8
6.0
6.1
4.9
5.Sales to fixed assets
3.5
3.6
3.7
3.2
3.3
3.7
6.6
6.Sales to other assets*
7.4
8.5
7.2
6.6
14.5
16.5
7.5
7.Sales to total assets
1.5
1.54
1.50
1.45
1.53
1.68
1.38
8.Sales to short-term liabilities
4.9
4.8
4.6
5.6
6.5
6.9
4.2
Asset Utilization
Exhibit CC.7

Common-Size Balance Sheets
Year 8
Current assets:
4.31%
0.31
Accounts receivable
12.71
Inventories
17.03
Prepaid expenses
2.23
36.60%
43.15%
10.50
Other assets
9.75
Total assets
100.00%
Notes payable
6.80%
11.63
Accrued liabilities
9.85
Dividend payable
0.89
1.63
30.80%
Long-term debt
18.62%
Other liabilities, mainly deferred taxes
7.35
Shareowners equity:
Preferred stock; auth 40,000,000 sh.; none issued
Capital stock, $0.15 par value; authorized 140,000,000 sh.;
issued 135,622,676 sh.
0.49
Capital surplus
2.59
46.10
6.52
0.57
43.22%
100.00%
Year 7
Year 6
1.96%
0.55
15.17
19.92
2.87
40.47%
41.74%
9.32
8.48
100.00%
3.07%
0.67
13.68
20.75
2.55
40.73%
39.18%
11.87
8.22
100.00%
2.38% 4.69%
0.97
9.05
13.49
10.94
18.41
20.13
2.51
1.62
37.76% 46.43%
41.80% 43.55%
13.76
6.68
10.02
100.00%100.00%
5.61%
8.64
10.82
22.10
1.14
48.31%
42.28%
9.41
100.00%
4.92%
12.76
11.95
0.78
1.13
31.54%
19.58%
7.77
6.90%
12.92
9.98
0.76
0.77
31.33%
16.00%
7.44
3.82%
12.38
6.56
1.16
23.92%
14.57%
9.02
3.02%
12.10
5.88
1.40
22.40%
12.27%
9.28
3.22%
11.64
6.00
1.80
22.66%
13.11%
8.52
0.49
1.50
40.17
2.60
1.54
41.11%
100.00%
0.52
1.29
45.16
1.80
0.05
45.23%
100.00%
0.56
0.66
1.17
1.33
52.06
55.19
2.08
1.51
0.79
0.38
52.50% 56.05%
100.00%100.00%
Industry Composite
Year 11
3.4%
16.5
38.6
2.2
60.70%
21.0%
18.3
100.00%
6.7%
10.2
15.8
32.70%
19.7%
1.5
0.73
1.38
56.25
1.75
0.91
55.70% 46.10%
100.00% 100.00%
Asset Utilization: summary and inferences

1.Total
1.Total Assets
Assets turnover
turnover ItIt isis stable
stable and
and higher
higher than
than the
the industry
industry
average
average
2.
2. Account
Account Receivables
Receivables and
and Inventory
Inventory turnover
turnover are
are improving
improving and
and
higher
higher than
than industry
industry norms.
norms. These
These improvement
improvement are
are due
due to
to
companys
companys efforts
efforts to
to reduce
reduce working
working capital
capital (less
(less receivables
receivables and
and
inventories)
inventories)
3.
3. Cash
Cash and
and fixed
fixed asset
asset turnover
turnover More
More erratic
erratic and
and lower
lower than
than
industry
industryaverage.
average.
Profitability Analysis
Cambbell'
s Sales and Cost of Sales Growth
158
Percent
148
138
128
118
108
98
6
10
11
Year
Exhibit CC.21
Profit margins
ANALYSIS OF PROFIT MARGIN RATIOS

Year 11
Year 10
Year 9
Year 8
Year 7
Year 6
Year 11
Industry
Composite
1.Gross profit margin
34.00%
31.38%
29.45%
30.32% 29.17%
28.09% 29.30%
2.Operating profit margin
12.63%
4.69%
3.54%
9.09%
10.46%
10.34%
3.Net profit margin
6.47%
0.07%
0.23%
5.63%
5.51%
5.21%
6.60%
Exhibit CC.6
Year 11
Year 10
Year 9
Net sales
Costs and expenses:
Interest expense
Interest income
Minority interests
Taxes on earnings
Net earnings
Year 8
Year 7
Year 6
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
66.01%
15.41
4.94
0.91
1.87
(0.42)
0.01
0.42
89.17%
68.62%
15.80
4.68
0.87
1.80
(0.28)
0.05
0.24
5.46
97.23%
70.55%
14.44
4.44
0.84
1.66
(0.68)
0.34
0.57
6.05
98.21%
69.68%
15.06
4.78
0.96
1.11
(0.68)
0.34
(0.07)
0.83
92.02%
70.83%
13.95
4.76
1.00
1.15
(0.66)
0.11
(0.21)
90.93%
71.91%
12.70
4.57
0.98
1.31
(0.64)
0.02
0.13
90.98%
10.83%
0.04
(0.12)
10.76%
4.29
2.77%
0.22
(0.09)
2.89%
2.82
1.79%
0.18
(0.09)
1.88%
1.65
7.98%
0.13
(0.13)
7.98%
3.02
9.07%
0.34
(0.10)
9.31%
3.80
9.02%
0.10
(0.09)
9.03%
3.83
6.47%
0.07%
0.23%
4.96%
5.51%
5.21%
6.47%
0.07%
0.23%
0.67
5.63%
5.51%
5.21%
Exhibit CC.8

Accounts receivable
Inventory
Working capital
Plant assets, net
Other assets
Long-term debt
Total liabilities
Shareowners equity
Net sales
Interest expense
Net income

(Year 6 = 100)
Year 11
Year 10
Year 9
Year 8
115%
176
5
116
114
204
34
153
156
213
192
117
52%
209
9
134
125
207
52
147
134
222
198
110
78%
180
11
134
120
197
52
132
124
174
176
116
55%
163
15
109
102
138
70
129
93
145
140
123
145
133
157
176
199
142
172
180
145
138
148
180
191
155
46
-102*
132
130
129
150
161
143
28
-104*
114
110
119
135
104
115
100
123
Year 7
Year 6
93%
113
117
102
108
111
105
115
119
105
111
113
$155.1
299.0
238.7
610.5
1,334.8
626.1
708.7
1,168.1
259.9
362.3
1,223.9
1,538.9
105
103
109
115
101
105
108
111
4,268.8
3,082.7
195.9
544.4
58.5
3,900.0
387.2
223.2
Exhibit CC.8

Accounts receivable
Inventory
Working capital
Plant assets, net
Other assets
Long-term debt
Total liabilities
Shareowners equity
Net sales
Interest expense
Net income

(Year 6 = 100)
Year 11
Year 10
Year 9
Year 8
Year 7
115%
176
5
116
114
204
34
153
156
213
192
117
52%
209
9
134
125
207
52
147
134
222
198
110
78%
180
11
134
120
197
52
132
124
174
176
116
55%
163
15
109
102
138
70
129
93
145
140
123
145
133
157
176
199
142
172
180
145
138
148
180
191
155
46
-102*
132
130
129
150
161
143
28
-104*
114
110
119
135
104
115
100
123
Year 6
93%
113
117
102
108
111
105
115
119
105
111
113
$155.1
299.0
238.7
610.5
1,334.8
626.1
708.7
1,168.1
259.9
362.3
1,223.9
1,538.9
105
103
109
115
101
105
108
111
4,268.8
3,082.7
195.9
544.4
58.5
3,900.0
387.2
223.2
Exhibit CC.6
Year 11
Year 10
Year 9
Net sales
Costs and expenses:
Interest expense
Interest income
Minority interests
Taxes on earnings
Net earnings
Year 8
Year 7
Year 6
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
66.01%
15.41
4.94
0.91
1.87
(0.42)
0.01
0.42
89.17%
68.62%
15.80
4.68
0.87
1.80
(0.28)
0.05
0.24
5.46
97.23%
70.55%
14.44
4.44
0.84
1.66
(0.68)
0.34
0.57
6.05
98.21%
69.68%
15.06
4.78
0.96
1.11
(0.68)
0.34
(0.07)
0.83
92.02%
70.83%
13.95
4.76
1.00
1.15
(0.66)
0.11
(0.21)
90.93%
71.91%
12.70
4.57
0.98
1.31
(0.64)
0.02
0.13
90.98%
10.83%
0.04
(0.12)
10.76%
4.29
2.77%
0.22
(0.09)
2.89%
2.82
1.79%
0.18
(0.09)
1.88%
1.65
7.98%
0.13
(0.13)
7.98%
3.02
9.07%
0.34
(0.10)
9.31%
3.80
9.02%
0.10
(0.09)
9.03%
3.83
6.47%
0.07%
0.23%
4.96%
5.51%
5.21%
6.47%
0.07%
0.23%
0.67
5.63%
5.51%
5.21%
Exhibit CC.22
Analysis of Depreciation
Year 11 Year 10 Year 9 Year 8
1.Accumulated depreciation as a percent of gross plant assets*
44.6% 42.3%
43.1% 43.7%
2.Annual depreciation expenses as a percent of gross plant
7.7%
7.7%
7.6% 6.9%
3.Annual depreciation expenses as a percent of sales
3.1%
3.0%
3.1% 3.3%
Year 7
Year 6
46.6%
48.6%
6.4%
6.4%
3.1%
2.8%
Exhibit CC.23

Analysis of Discretionary Expenditures ($ mil.)
Year 11
Year 10 Year 9
Year 8
Net sales
$
6,204.1
$
$4,286.8
Plant assets (net)*
1,406.5
1,152.0
974.1
Maintenance and repairs
173.9
180.6
Advertising
195.4
220.4
Research & development (R&D)
56.3
53.7
Maintenance and repairs sales
2.8%
2.9%
Maintenance and repairs plant
12.4
13.0
Advertising sales
3.1
3.6
R&D sales
0.9
0.9
6,205.8
1,386.9
Year 7
5,672.1
Year 6
$4,868.9$4,490.4
1,322.6
1,329.1
173.9
212.9
47.7
3.1%
13.1
3.8
155.6
219.1
46.9
3.2%
11.7
4.5
148.8
203.5
44.8
3.3%
12.9
4.5
144.0
181.4
42.2
3.4%
14.8
4.2
0.8
1.0
1.0
1.0
Exhibit CC.8

(Year 6 = 100)
Year 11
Year 10
Year 9
Year 8

Accounts receivable
Inventory
Working capital
Plant assets, net
Other assets
Long-term debt
Total liabilities
Shareowners equity
Net sales
Interest expense
Net income
115%
176
5
116
114
204
34
153
156
213
192
117
52%
209
9
134
125
207
52
147
134
222
198
110
78%
180
11
134
120
197
52
132
124
174
176
116
55%
163
15
109
102
138
70
129
93
145
140
123
145
133
157
176
199
142
172
180
145
138
148
180
191
155
46
-102*
132
130
129
150
161
143
28
-104*
114
110
119
135
104
115
100
123
Year 7
Year 6
93%
113
117
102
108
111
105
115
119
105
111
113
$155.1
299.0
238.7
610.5
1,334.8
626.1
708.7
1,168.1
259.9
362.3
1,223.9
1,538.9
105
103
109
115
101
105
108
111
4,268.8
3,082.7
195.9
544.4
58.5
3,900.0
387.2
223.2
Profitability: summary and inferences

1.
1. Gross
Gross profit
profit margin
margin
ItIt isis steadily
steadily improving
improving and
and above
above the
the
industry
industryaverage
average
2.
2. Net
Netprofit
profitmargin
marginItItisisnot
notas
assolid
solidas
asgross
grossmargin,
margin,due
dueprimarily
primarilyto
to
increasing
increasing of
of operating
operating expenses.
expenses. Recent
Recent activities
activities suggest
suggest that
that
Campbell
Campbellisisattempting
attemptingto
togain
gainaagreater
greatercontrol
controlover
overthese
theseexpenses
expenses

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10

Steps in Analyzing Financial Statements

Building Blocks of Analysis

Reporting on Financial Statement Analysis

Preliminary Financial Analysis: company overview

Preliminary Financial Analysis

CAMPBELL SOUP COMPANY

Campbell Biscuit and Bakery:

Preliminary Financial Analysis

Source: Annual Report

Preliminary Financial Analysis

CAMPBELL SOUP COMPANY

Income Statements (millions)

Preliminary Financial Analysis

Preliminary Financial Analysis

Cash and cash equivalents

CAMPBELL SOUP COMPANY

Preliminary Financial Analysis

CAMPBELL SOUP COMPANY

Preliminary Financial Analysis

CAMPBELL SOUP COMPANY

Ten-Year Growth Rates*

Preliminary Financial Analysis

Preliminary Financial Analysis

Statements of Cash Flows

For Years 6 to 11 ($ millions)

Cash flows from operating activities:

(Increase) decrease in accounts receivable

Cash Flow Analysis and Forecasting

Cash Flow Analysis and Forecasting

Common-Size Statements of Cash Flows*

Cash flows from operating activities:

(Increase) decrease in accounts receivable

Cash Flow Analysis and Forecasting

Cash Flow Analysis and Forecasting

CAMPBELL SOUP COMPANY

*All amounts are from the statement of cash flows.

Short-Term Liquidity Analysis

Short term analysis

Cash and cash equivalents

CAMPBELL SOUP COMPANY

Short term analysis

CAMPBELL SOUP COMPANY

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Total current liabilities

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Short-Term Liquidity Analysis

CAMPBELL SOUP COMPANY

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Total current liabilities

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Short-Term Liquidity Analysis

Preliminary Financial Analysis

Cash and cash equivalents

CAMPBELL SOUP COMPANY

3.Goods available for sale

5.Cost of products sold

Less: Adjustment of inventories to LIFO

Total ending inventories

Short-Term Liquidity Analysis

Current ratio 1.19

Days sales in receivables 30.60

Days sales in inventory 62.12

Inventory turnover 5.37