General Mills is currently trading at $85.74 per share and has a Graham number of $42.99, which implies that it is 99.4% above its fair value. We calculate the Graham number as follows:

*√(22.5 * earnings per share * book value per share) = √(22.5 * 4.79 * 17.149) = 42.99*

The Graham number is one of seven factors that Graham enumerates in Chapter 14 of *The Intelligent Investor* for determining whether a stock offers a margin of safety. Rather than use the Graham number by itself, its best to consider it alongside the following:

**Sales Revenue Should Be No Less Than $100 million.**

For General Mills, average sales revenue over the last few years has been $17,902,900,000 so according to the analysis the stock has impressive sales revenue.

**Current Assets Should Be at Least Twice Current Liabilities.**

We calculate General Mills's current ratio by dividing its total current assets of $5,089,800,000.00 by its total current liabilities of $8,019,900,000.00. Current assets refer to company assets that can be transferred into cash within one year, such as accounts receivable, inventory, and liquid financial instruments. Current liabilities, on the other hand, refer to those that will come due within one year. General Mills’s current liabilities are actually greater than its current assets, since its current ratio is only 0.6.

**The Company’s Long-term Debt Should Not Exceed its Net Current Assets**

This means that its ratio of debt to net current assets should be 1 or less. Since General Mills’s debt ratio is -3.1, the company has negative current asset / liability balance. We calculate General Mills’s debt to net current assets ratio by dividing its total long term of debt of $9,134,800,000 by its current assets minus total current liabilities.

**The Stock Should Have a Positive Level of Retained Earnings Over Several Years.**

In General Mills’s case, the retained earnings have averaged $16,645,300,000 over the last 4 years. Retained earnings refer to the net income left for equity investors after all expenses have been accounted for, including dividends. It's a similar metric to free cash flow, with the difference being that earnings are calculated on an accrual, as opposed to a cash basis.

**There Should Be a Record of Uninterrupted Dividend Payments Over the Last 20 Years.**

General Mills has returned an average dividend yield of 3.5% over the last five years, and has offered regular dividends since at least 2003.

**The Company Should Have a Minimum Increase of at Least One-third in Eps Over the Past 10 Years.**

To determine General Mills's Eps growth over time, we will average out its Eps for 2009, 2010, and 2011, which were $1.90, $2.24, and $2.70 respectively. This gives us an average of $2.28 for the period of 2009 to 2011. Next, we compare this value with the average Eps reported in 2020, 2021, and 2022, which were $3.56, $3.78, and $4.42, for an average of $3.92. Now we see that General Mills's Eps growth was 71.93% during this period, which satisfies Ben Graham's requirement.

It may be trading far above its fair value and have a highly leveraged balance sheet, but General Mills satisfies some of the criteria Benjamin Graham used for identifying for an undervalued stock because it has:

- impressive sales revenue
- good record of retained earnings
- a solid record of dividends
- Eps growth in excess of Graham's requirements