Access the Form 10-K annual report of Kraft Foods Group Inc. Money amounts are r
ID: 2421367 • Letter: A
Question
Access the Form 10-K annual report of Kraft Foods Group Inc. Money amounts are reported in millions of dollars, You will need to use the following pages in the annual report to answer all the exam questions in this section: pages 34 to 38 - Financial statements and pages 39 to 70 - Notes to financial statements.
Kraft 10k form here: https://www.sec.gov/Archives/edgar/data/1545158/000154515815000018/krft10-k122714.htm
Calculate the accounts receivable turnover and average collection period for the year 2014. (Hint: use gross accounts receivables for your calculations, not net!)
Account Receivable turnover =
Average Collection period =
Explanation / Answer
Accounts Receivable Turnover = Sales / Average Accounts Receivables
Turnover for 2014 is $ 18,205 million
Receivables for 2013 gross of allowances = $ 1,048 + $ 26 = $ 1,074
Receivables for 2014 gross of allowances = $ 1,080 + $ 21 = $ 1,101
Average Accounts Receivables = ($ 1,074 + $ 1,101) / 2 = $ 1,187.50
Hence, the Acccounts Receivable Turnover for 2014 will be $ 18,205/$ 1,187.50 = 15.33 times
Average Collection Period (assuming a year of 365 days) = 365/15.33 = 23.81 or 24 days