How has the recession (2008-2009) affected companies’ balance sheets?
During the time of an economic recession, many businesses, small and large were forced to close, or were in debt. Looking at Tyson's balance sheet from the year 2008-2009, although its amount of cash and cash equivalents increased from the year 2008 to year 2009, the total assets decreased. Also, amount of debt increased by over 200 (units in millions), and the value of the stock decreased. Also, the Long-Term debt increased by over 1,000 (units in millions). Clearly Tyson had a hard time during the recession to grow the company and generate more money. However, when looking at the balance sheet from 2009-2010 the total assets increased as well as the retained earnings, which did not happen in the year during the recession. Also, it is important to note that the Long-Term decreased significantly from the year 2009. During a recession people may choose to cut their spending on meat, or eat less of it, because it is more expensive, which can be seen in its balance sheets. From Tyson's balance sheet one can infer that the recession hit the company hard, however, looking at the next years balance sheet, one can note that the company is paying off its debts and dealing with the financial problems that it endured during the recession.
Another company I looked at was at General Mills. From 2008-2009 the Net Sales grew by over 1,000 (units in millions), the earnings per share increased by .07 cents, cash flow increased, and the high stock price was larger in 2009 than it was in 2008. Also, the cash dividends per common share were $1.72 whereas they were only $1.57 in 2008. Although the economy did take a turn for the worse during the 2008-2009 recession, families probably cereal as a low-cost food to have in their house. Even though many companies did not do well in the fiscal year 2008-2009, General Mills was able to withstand the recession and even make some money.
http://ir.tyson.com/phoenix.zhtml?c=65476&p=irol-reportsannual
http://phx.corporate-ir.net/phoenix.zhtml?c=74271&p=quarterlyearnings
I remember I was in business 1.0 during the beginning of the recession and we talked extensively about how General mills cereal sales increased 25% in Q3 of 2008. Families were substituting dinner with cereal.
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