Q1) The 2004 annual report of General Mills (maker for Cheerios® and Wheaties®) reported following amounts (in millions of dollars).
Net sales, for year ended May 30, 2004 $11,070
Receivables, less allowance for doubtful accounts of $19, May 30 2004 1,010
Receivable, less allowance for doubtful accounts of $28, May 25, 2003 980
Questions:
1. Calculate General Mills' accounts receivable turnover ratio for 2004. (Suppose that all sales are on credit.)
2. Determine average collection period, in days, for account receivable? Describe your answer.
3. Give some suitable examples of types of customers you would expect General Mills to have. Do you beleive the average collection period for sales to these customers is reasonable? What other information do you require to fully reply this question?