Accounts Receivable and Inventory Analyses for Kelloggs and General Mills

The following information was obtained from the fiscal year 2014 and 2013 financial statements included in Form 10-K of Kellogg Company and Subsidiaries and General Mills, Inc. and Subsidiaries. (Year-ends for Kelloggs are January 3, 2014, and December 28, 2013, and for General Mills are May 25, 2014, and May 26, 2013.) Assume all sales are on credit for both companies.

(in millions)			Kelloggs	General Mills
Accounts receivable, net*		End of 2014	$1,200	$1,500
		End of 2013	1,600	900
Inventories		End of 2014	1,300	1,600
		End of 2013	950	4,400
Net sales		2014	14,000	18,000
		2013	15,000	17,000
Cost of goods sold**		2014	9,000	12,000
		2013	8,000	11,000
*Described as receivables by General Mills.
**Described as cost of sales by General Mills.

Required:

Round your intermediate calculations and final answers to one decimal place. Assume a 360-day year.

1. Using the information provided, compute the following for each company for 2014:

	Kelloggs		General Mills
a. Accounts receivable turnover ratio	fill in the blank 1	times	fill in the blank 2	times
b. Number of days' sales in receivables	fill in the blank 3	days	fill in the blank 4	days
c. Inventory turnover ratio	fill in the blank 5	times	fill in the blank 6	times
d. Number of days' sales in inventory	fill in the blank 7	days	fill in the blank 8	days
e. Cash-to-cash operating cycle	fill in the blank 9	days	fill in the blank 10	days

2. All the following are true with respect to liquidity of each of these companies EXCEPT for:

General Mills, Inc. and The Kellogg's Company have the same inventory turnover ratios, leading to the same number of days' sales in inventory.

The Kellogg Company has a few days less in its cash-to-cash operating cycle than does General Mills, Inc.

General Mills, Inc. has a higher accounts receivable turnover ratio than The Kellogg Company.

The Kellogg Company has a higher number of days' sales in receivables as compared to General Mills, Inc.

abcd

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