the following amounts (in millions of dollars`
net sale, for the year ended May 30,2004 $11,070
receivables, smaller quantity allowance for doubtful accounts of $19, May 30,2004 1,010
receivable, less allowance for doubtful accounts of $28, May 25,2003 980
1. compute broad mills' accounts receivable turnover ratio for 2004. (assume that all sale are on credit.)
2.what is the average collection period, contained by days, for account receivable? explain your answer.
3.dispense some examples of the types of customer you would expect general mills to own. do you think the average collections time for sales to these customers is conceivable?what other information do you need to fully answer this interrogate?
Answers: 1. a/r turnover ratio is:
net sales/average accounts receivable
so
11070/((1010+980)/2) = 11070/995 = 11.13 times
2. average collection time is 365/ acct. rec. turnover (calculated surrounded by 1)
so 365/11.13 = 33 days
3. given that General Mills deals surrounded by food, receivable turnover is frequent. you can go to General Mills' public filings (10-K, 10-Q)
from GIS most modern 10-K:
"Our primary customers are grocery stores, mass merchandisers, membership stores, unprocessed food chains, drug, dollar and discount chains, commercial and noncommercial foodservice distributors and operators, and convenience stores. We unanimously sell to these customers for resale to consumers through our direct sale force. We use broker and distribution arrangements for certain products or to serve faultless types of customers. We also use these types of arrangements in smaller amount developed markets internationally.
During fiscal 2007, Wal-Mart Stores, Inc. and its affiliates (Wal-Mart), accounted for 20 percent of our consolidated network sales and 27 percent of our network sales contained by the U.S. Retail segment. No other customer accounted for 10 percent or more of our consolidated net sale. Wal-Mart also represented 5 percent of our net sale in the International segment and 6 percent of our network sales surrounded by the Bakeries and Foodservice segment. As of May 27, 2007, Wal-Mart accounted for 20 percent of our receivables invoiced in the U.S. Retail segment, 3 percent of our receivables invoiced surrounded by the International segment and 3 percent of our receivables invoiced in the Bakeries and Foodservice segment. There have been significant worldwide consolidation contained by the food retailing industry in recent years, and we believe that this trend is credible to continue. The 5 largest customers contained by our U.S. Retail segment accounted for 54 percent of its fiscal 2007 net sale, the 5 largest customers in our International segment accounted for 41 percent of its fiscal 2007 lattice sales, and the 5 largest customers contained by our Bakeries and Foodservice segment accounted for 40 percent of its fiscal 2007 net sale. Although the loss of any large customer for an extended length of time could negatively impact our sale and profits, we do not anticipate that this will occur to a significant extent due to the consumer constraint for our products and our relationships with our customers. For further information on our customer credit and product return practices please refer to Note 2 to the Consolidated Financial Statements on page 43 through 47 in Item 8 of this report."
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net sale, for the year ended May 30,2004 $11,070
receivables, smaller quantity allowance for doubtful accounts of $19, May 30,2004 1,010
receivable, less allowance for doubtful accounts of $28, May 25,2003 980
1. compute broad mills' accounts receivable turnover ratio for 2004. (assume that all sale are on credit.)
2.what is the average collection period, contained by days, for account receivable? explain your answer.
3.dispense some examples of the types of customer you would expect general mills to own. do you think the average collections time for sales to these customers is conceivable?what other information do you need to fully answer this interrogate?
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Answers: 1. a/r turnover ratio is:
net sales/average accounts receivable
so
11070/((1010+980)/2) = 11070/995 = 11.13 times
2. average collection time is 365/ acct. rec. turnover (calculated surrounded by 1)
so 365/11.13 = 33 days
3. given that General Mills deals surrounded by food, receivable turnover is frequent. you can go to General Mills' public filings (10-K, 10-Q)
from GIS most modern 10-K:
"Our primary customers are grocery stores, mass merchandisers, membership stores, unprocessed food chains, drug, dollar and discount chains, commercial and noncommercial foodservice distributors and operators, and convenience stores. We unanimously sell to these customers for resale to consumers through our direct sale force. We use broker and distribution arrangements for certain products or to serve faultless types of customers. We also use these types of arrangements in smaller amount developed markets internationally.
During fiscal 2007, Wal-Mart Stores, Inc. and its affiliates (Wal-Mart), accounted for 20 percent of our consolidated network sales and 27 percent of our network sales contained by the U.S. Retail segment. No other customer accounted for 10 percent or more of our consolidated net sale. Wal-Mart also represented 5 percent of our net sale in the International segment and 6 percent of our network sales surrounded by the Bakeries and Foodservice segment. As of May 27, 2007, Wal-Mart accounted for 20 percent of our receivables invoiced in the U.S. Retail segment, 3 percent of our receivables invoiced surrounded by the International segment and 3 percent of our receivables invoiced in the Bakeries and Foodservice segment. There have been significant worldwide consolidation contained by the food retailing industry in recent years, and we believe that this trend is credible to continue. The 5 largest customers contained by our U.S. Retail segment accounted for 54 percent of its fiscal 2007 net sale, the 5 largest customers in our International segment accounted for 41 percent of its fiscal 2007 lattice sales, and the 5 largest customers contained by our Bakeries and Foodservice segment accounted for 40 percent of its fiscal 2007 net sale. Although the loss of any large customer for an extended length of time could negatively impact our sale and profits, we do not anticipate that this will occur to a significant extent due to the consumer constraint for our products and our relationships with our customers. For further information on our customer credit and product return practices please refer to Note 2 to the Consolidated Financial Statements on page 43 through 47 in Item 8 of this report."
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