June 7, 2018

Bloomberg Comments on Kellogg’s Use of IOU’s

Beware food companies relying on their bookkeeping rather than their cooking to keep investors satisfied.

A number of food companies have recently been selling their IOUs to deal with the fact that their customers, namely giant retailers like Walmart Inc., are taking longer to pay. The sales bolster cash flows, but critics contend they can make the giant food companies’ finances look better than they truly are as they face increased business pressures. The financing charges can also make those sales less profitable.

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