Financial Analysis - Sara Lee Corp Essay - 4134 Words

Sara Lee Corp Sara Lee operates as a global manufacturer and marketer of brand-name packaged foods and household products. Their products are distributed in grocery stores, drug stores, and food-service outlets. In February 2005, the firm embarked on mission to centralize and streamline its organization. Several less profitable business segments and brands were divested. Although Sara Lee owns well-known brands such as Sara Lee, Hillshire Farms, and Jimmy Dean, its products are segmented, making it difficult to achieve pricing power. Sara Lee is also feeling the pressure of rising commodity costs and changes in consumer trends. Many industry analysts are skeptical as to whether the restructuring initiative and strategy shift will†¦show more content†¦D. Changes in inventory, there is a sharp decline from ’06 to ’07 on the balance sheet due to divested businesses. The change in cash flows in ‘07 supports building inventory in order to support changing industry tre nds. Cash from Investing Activities: E. Capital Expenditures: large cash expenditures also show investment in the business and support the growth strategy. F. Investments? If I was auditing SLE I would require disclosure of this amount. There is nothing on the income statement that explains this cash gain. (The Income Statement is attached for review in Appendix A). G. Other Cash flows from investing activities – shows shrinkage in business. This amount also requires further explanation and is not found on the income statement. H. Long Term Investments: from Balance Sheet, no long-term investing also shows a business in the declining stage of the life cycle. I. Total Cash Flows from Investing: even with the significant amount of capital expenditures, the positive inflow states a decline in business investment which is not good news for the future; this is surprising based on the new strategy focus. Cash from Financing Activities: J. 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