Deciphering Financial Statements (Diageo)
Diageo is a United Kingdom (UK) consumer products firm, best known in the United States for the following brand names: Smirnoff, Johnnie Walker, J&B, Gordon’s, Seagram’s, and Guinness. Diageo’s 2004 consolidated balance sheet follows.
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Diageo |
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Consolidated Balance Sheet |
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30 June 2004 |
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(In millions of pounds) |
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Fixed assets |
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Intangible assets |
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4,012 |
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Tangible assets |
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1,976 |
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Investments in associates |
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1,263 |
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Other investments |
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1,772 |
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9,023 |
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Current assets |
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Stocks |
2,176 |
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Debtors—due within one year |
1,573 |
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Debtors—due after one year |
151 |
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Cash at bank and liquid resources |
1,167 |
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5,067 |
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Creditors—due within one year |
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|
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Borrowings |
(2,001) |
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Other creditors |
(3,022) |
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(5,023) |
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Net current assets (liabilities) |
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44 |
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Total assets less current liabilities |
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9,067 |
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Creditors—due after more than one year |
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|
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Borrowings |
(3,316) |
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Other creditors |
(109) |
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(3,425) |
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Provisions for liabilities and charges |
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(709) |
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Net assets before post-employment assets and liabilities |
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4,933 |
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Post-employment assets |
7 |
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Post-employment liabilities |
(757) |
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(750) |
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Net assets |
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4,183 |
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Capital and reserves |
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Called up share capital |
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885 |
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Share premium account |
1,331 |
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Revaluation reserve |
113 |
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Capital redemption reserve |
3,058 |
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Profit and loss account |
(1,695) |
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Reserves attributable to equity shareholders |
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2,807 |
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Shareholder funds |
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3,692 |
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Minority interests |
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Equity |
179 |
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Non-equity |
312 |
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491 |
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4,183 |
Re-create Diageo’s June 30, 2004, balance sheet using U.S. terminology and a standard U.S. format. (Note: Two of the reserve items have no counterpart in the United States. The revaluation reserve is the amount by which tangible assets have been written up to reflect an increase in market value. The capital redemption reserve is recorded when a company repurchases, or redeems, its own shares. Accounting for share repurchases is discussed in Chapter 13; for purposes of this exercise, add the capital redemption reserve to “called up share capital.”)