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Homework answers / question archive / Accounts Receivable and Inventory Analyses for Kellogg's and General Mills   The following information was obtained from the fiscal year 2014 and 2013 financial statements included in Form 10-K of Kellogg Company and Subsidiaries and GeneralMills, Inc

Accounts Receivable and Inventory Analyses for Kellogg's and General Mills   The following information was obtained from the fiscal year 2014 and 2013 financial statements included in Form 10-K of Kellogg Company and Subsidiaries and GeneralMills, Inc

Accounting

Accounts Receivable and Inventory Analyses for Kellogg's and General Mills

 

The following information was obtained from the fiscal year 2014 and 2013 financial statements included in Form 10-K of Kellogg Company and Subsidiaries and GeneralMills, Inc. and Subsidiaries. (Year-ends for Kellogg's are January 3, 2015, and December 28, 2013, and for GeneralMills areMay 25, 2014, andMay 26, 2013.) Assume all sales are on credit for both companies.

162275

Required

 

1. Using the information provided, compute the following for each company for 2014:

a. Accounts receivable turnover ratio

b. Number of days' sales in receivables

c. Inventory turnover ratio

d. Number of days' sales in inventory

e. Cash-to-cash operating cycle

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a) Accounts Receivable Turnover Ratio = Net Sales Revenue / Average Accounts Receivable
Kelloggs = $14580 / $1350 = 10.80 times
Average Accounts Receivable = ($1276 + $1424) / 2 = $1350


General Mills = $17,909.6 / $1465 = 12.22 times
Average Accounts Receivable = ($1483.6 + $1446.4) /2 = $1465

 

b) Number of days sales in receivables = 360 / Accounts Receivable Turnover Ratio
Kelloggs = 360 / 10.80 = 33.33 or 33 days
General Mills = 360 / 12.22 = 29.45 ot 29 days

 

c) Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
Kelloggs = $9,517 / $1,263.50 = 7.53 times
Average Inventory = ($1279 + $1248) / 2 = $1,263.50


General Mills = $11,539.8 / $1,552.45 = 7.43 times
Average Inventory = ($1559.4 + $1545.5) = $1,552.45

 

d) Number of days sales in inventory = 360 / Inventory Turnover Ratio
Kelloggs = 360 / 7.53 = 47.79 or 48 days
General Mills = 360 / 7.43 = 48.43 or 48 days

 

e) Cash to cash operating cycle = Days inventory outstanding + Days sales outstanding
Kelloggs = 48 + 33 = 81 days
General Mills = 48 + 29 = 77 days

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