Kaplan University Financial Statement Analysis Case Study
Unit 4 Assignment:
Campbell Soup
Case 4-4In this Assignment, you will explore the asset structure of Campbell Soup and how it measures their use effectively. This will prepare you to view any company with the same scrutiny.Locate the Campbell Soup Case 4-4 on page 272 of your text. Be sure to submit thoughtful and substantial answers to the questions following each case.
CASE 4–4
Analysis of Investing Activities
Campbell Soup
Refer to the annual report of Campbell Soup Company in
Appendix A
.
a. Compute Campbell Soup’s working capital at the end of Year 11.
b. Campbell Soup reports net receivables totaling over $527 million. Towhom has it extended credit and how much bad debt reserve is providedagainst these receivables? What percentage of total receivables isconsidered uncollectible?
c. What cost flow assumption does Campbell Soup use for inventories? What is its inventory write-down policy?
d. The inventory turnover ratio (cost of goods sold/average inventory) is a measure of inventory management efficiency and effectiveness. Compute the inventory turnover ratio for Campbell Soup and comment on ways that it might improve the ratio.
e. How much is the LIFO reserve for CampbellSoup? What are the total tax benefits realized by Campbell Soup as ofthe end of fiscal Year 11 because it chose the LIFO inventory cost flowassumption (assume a 35% tax rate)?
f. What would Campbell Soup’s pretax income have been in Year 11 if it had chosen FIFO?
g. What percentage of total assets isCampbell Soup’s investment in plant assets? What depreciation methoddoes it use for fixed assets? What percentage of historical cost is theaccumulated depreciation amount associated with these assets? What canthe percentage depreciated calculation reveal to an analyst about fixedassets?h. Campbell Soup reports intangible assetstotaling about $436 million at the end of Year 11. What majortransaction(s) gave rise to this amount?
CHECK(d) Inventory turnover, 5.37
(f) $672.4 mil.
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