The information below is from the 2008 financial statements and accompanying notes of The Scotts Company, a major manufacturer of lawn-care products.

Instructions Answer each of the following questions.

(a) Calculate the receivables turnover ratio and average collection period for 2008 for the company.

(b) Is accounts receivable a material component of the company’s total 2008 current assets?

(c) Scotts sells seasonal products. How might this affect the accuracy of your answer to part (a)?

(d) Evaluate the credit risk of Scotts’ 2008 concentrated receivables.

(e) Comment on the informational value of Scotts’ Note 19 on concentrations of credit risk.

FINANCIAL ANALYSIS ON THE WEB

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(in millions) Accounts receivable Allowance for uncollectible accounts Sales Total current assets 2008 $ 270.4 2007 $ 259.7 10.6 2,981.8 1,044.91 11.4 2,871.8 999.3