Disclosure Analysis of the Kellogg Company

balance sheet and income statement (Yes.  Accounts receivable will be on the balance sheet and the advertising expenses on the income statement)

In order to confirm the accounts receivable balances, I decided to use positive confirmations since this was my first time auditing the company and the collateral for the loan would be the receivables. The confirmations helped to verify the accuracy and existence of the accounts. I also calculated the Receivables Turnover Ratio in order to better evaluate the overall success of collection on accounts. The sample size that I chose was determined by the factors of tolerable misstatement, inherent risk, control risk, achieved detection risk

2.2 Inventories (AASB 1019) as a general principle, inventories are valued at the lower of cost (including fixed and variable factory overheads where applicable) and net realizable value. Cost is determined on the basis of first-in-first-out, average or standard, whichever is the most appropriate in each case.

For most firms the optimal amount of uncollectibles is not zero. For Alcatel to have no uncollectible accounts they would have to use a very strict credit policy and would most likely not be able to sell to as many as customers. Enforcing this policy would be very costly and they would likely eliminate many customers who would pay their bills but would not be able to pass a credit check. On the other hand if Alcatel's credit policy is too loose they risk having too many customers who will not pay or will pay late. Alcatel was able to manage some of these risks and generate cash immediately by selling a portion of their receivables to banks and financial firms. Other steps that can be taken to manage the risk of uncollectible accounts include: requiring risky customers to provide letters of credit or bank guarantees, requiring particularly risky customers to pay cash on delivery, asking potential customers for references from banks and suppliers to determine their payment history, and continually checking the financial health of regular customers.

actual accounts, which can be considered as uncollectible, i.e. those that are already over 90 days. The balance

Kellogg’s is highly a profile company which is hugely known not only in the UK but in the world at large. It is one of the largest breakfast companies in the word, not only that but it is also financially it is a stably and well organised company. Kellogg’s profits have been stable if not increasing for the better from what it was 5 years ago.

When an account receivable is determined to be uncollectable it is no longer qualified as an asset and should be written off. A write off reduced the balance of the customers

Account receivables accounts for purchases which consumers have not yet aid for. This takes cares of any losses that the firm might incur due to allowing credit to certain clients. Bad debts are recorded in the income statement and they represent the des which the company doesn’t expect to be paid back. The account

Note 3 touches on the category of cash and cash equivalents. Some of the cash equivalents are "available for sale securities." These include agency obligations ($20 million), commercial paper ($87 million), corporate debt securities ($78 million), government treasury securities ($606 million) and certificates of deposit ($64 million). In addition, the balance sheet shows $1.1886 billion in cash. There are stated at fair market value, which if it cannot be determined on the open market is estimated. The company values auction rate securities using an internally-developed valuation model. The company also notes that some of the "available for sale" securities are longer-term in

11. Accounts receivable turnover and days sales in accounts receivable for the last three years:

Exhibit 6, 8, and 9 (figures in $ millions) provides selected balance sheet items for Ford, General Motors, and DaimlerChrylser. The given information indicates that Ford carries the highest amount of cash and marketable securities among the three companies. In 1999, Ford had $25,173 of cash and marketable securities while General Motors and Daimler-Chrylser have only $12,140 and $9,163. Comparing at an industry level, we as a team

Kellogg’s is a company that produces and sells cereals, fruit flavored snacks, breakfast biscuits, beverage, crackers, toasters pastries,

The proportion of the total dollar amount receivable I included in the confirmation request is in “Account Receivable Aging Analysis” by diving the total amount that is collectible “C” by the total amount of sales. The result is 82% ($9,803,430/$11,920,028) of the total dollar balance in accounts receivable.

In order to test his hypothesis, the author followed the Dechow and Dichev (2002), which examines the standard deviations of residuals from a regression of accounts receivable accruals on corresponding cash flow realizations. The model uses information related to accounts receivable, sales cash collected during the periods, and errors in accounts receivable accruals (sresid). The author

They can implement the aggressive pricing strategy to strike the new entrants at anytime as they’ve got the large share of the market. Therefore, the threat of new entrants is low. For Threat of Substitutes, Kellogg is the largest cereal producer in this market and it has the long history and strong brand in the market. So they’ve had a large base of loyal customers who are hardly shift to other substitutes. But on the other hands, Kellogg’s cereal product is mainly to serve for breakfast. So, anything that is popular at breakfast time such as fruits, sandwiches, congee, or other healthy foods may be the potential threat of Kellogg. Therefore, the Treat of substitutes is Medium. For Suppliers power, the raw materials of Kellogg products include sugar, flour, food grain, which the market has many suppliers for providing it. Kellogg can switch to other suppliers easily and Kellogg has better control on the cost and has more bargaining power to deal with the supplier as Kellogg has a large market share of the market. Therefore, the bargaining power of supplier is low. For Buyers Power, Kellogg has done a series of marketing activities to educate the consumers and create product awareness in order to capture customers. Due to the consumer awareness, Kellogg can provide pressure to their