Compute Cash Conversion Cycle for Competing Firms

Kellogg$$s Company and General Mills compete in the consumer packaged goods $($CPG$)$ sector. Refer to the following $2018$ financial data for the two companies to answer the requirements.

$ millions K GIS

Total revenue $$14,575\mathrm{.}0$ $$16,768\mathrm{.}0$

Cost of sales and services $9,849\mathrm{.}010,312\mathrm{.}9$

Average accounts receivable $1,382\mathrm{.}02,585\mathrm{.}0$

Average inventory $2,302\mathrm{.}01,562\mathrm{.}9$

Average accounts payable $2,348\mathrm{.}03,461\mathrm{.}0$

Note: Complete the entire question in Excel and format each answer to two decimal places. Then enter the answers into the provided spaces below with two decimal places.

a$.$ Compute the following measures for both companies.

$1.$ Days sales outstanding $($DSO$)$

Company DSO

K Answer

GIS Answer

$2.$ Days inventory outstanding $($DIO$)$

Company DIO

K Answer

GIS Answer

$3.$ Days payable outstanding $($DPO$)$

Company DPO

K Answer

GIS Answer

$4.$ Cash conversion cycle $($CCC$)$

Company CCC

K Answer

GIS Answer

Question Company

b$.$ Which company better manages its accounts receivable? Answer

c$.$ Which company uses inventory more efficiently? Answer

d$.$ Which company better manages its accounts payable? Answer