Compute General Mills' accounts receivable turnover ratio and average collection period.
The 2004 annual report of General Mills (the maker for Cheerios® and Wheaties®) reported the following amounts (in millions of dollars).
Net sales, for the 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
Required
1.Compute General Mills' accounts receivable turnover ratio for 2004. (Assume that all sales are on credit.)
2.What is the average collection period, in days, for an account receivable? Explain your answer.
3.Give some examples of the types of customers you would expect General Mills to have. Do you think the average collection period for sales to these customers is reasonable? What other information do you need to fully answer this question?