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ACC - Leggett & Platt (a furniture manufacturer)




Question;PROBLEM # 1: Accounts Receivable Turnover and Average Collection PeriodThe asset side of the 2011 balance sheet for Leggett & Platt (a furniture manufacturer) is below. The company reported net sales of $3,636.0 million in 2011 and $3,359.1 million in 2010. Use this information to answer the requirements:LEGGETT & PLATT, INCORPORATEDConsolidated Balance SheetsDecember 3120112010(in millions)Cash and cash equivalents$ 236.3$ 244.5Accounts and other receivables, net of allowance of $24.3 (2011) and $22.1 (2010)503.6478.9Finished goods261.3241.1Work in process 41.547.7Raw materials and supplies223.9218.2LIFO reserve(85.7) (71.7)Total inventories, net441.0435.3Other current assets 43.160.4Total current assets 1,224.01,219.1Machinery and equipment 1,120.11,136.6Buildings and other608.5613.0Land 45.248.5Total property, plant and equipment 1,773.81,798.1Less accumulated depreciation 1,193.21,173.9Net property, plant and equipment580.6624.2Goodwill926.6930.3Other intangibles, less accumulated amortization of $106.2 and $107.8 at December 31, 2011 and 2010, respectively116.6152.3Sundry 67.375.1TOTAL ASSETS $2,915.1$3,001.0Required:a. Compute the accounts receivable turnover for 2011 and 2010.At December 31, 2009, accounts and other receivables, gross were $491.6 million.b. Compute the average number of days that the receivables were outstanding in each year.c. Does the number of days to collect receivables seem appropriate for Leggett & Platt?d. How could Leggett & Platt improve its accounts receivable turnover?e. Explain the changes in the allowance for doubtful accounts from 2010 through 2011. Does it appear that Legget increased or decreased its allowance for doubtful accounts beyond what seems reasonable? As background, write-offs were $19.9 in 2011 and $10 in 2010.


Paper#39929 | Written in 18-Jul-2015

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