Case: Compare receivables management using ratios; Del Monte Foods and Smithfield Foods
The table below contains selected financial information included in the 2013 financial statements of Del Monte Foods Co. and Smithfield Foods Inc.
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($ in millions)
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Del Monte
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Smithfield
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2013
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2012
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2013
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2012
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Balance sheets:
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Accounts receivable,net
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$ 191.7
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$ 195.3
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$ 663.2
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$ 624.7
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Income statements:
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Net sales
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3,819.4
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3,676.2
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13,221.1
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13,094.3
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Required:
1. Calculate the 2013 receivables turnover ratio and average collection period for both companies. Evaluate the management of each company's investment in receivables.
2. Obtain annual reports from three corporations in the same primary industry and compare the management of each company's investment in receivables.