Determining average collection period for account receivable


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?

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: Determining average collection period for account receivable
Reference No:- TGS019869

Expected delivery within 24 Hours