, Columnist
Food Companies Stuff Cash Flow With Artificial Fillers
Giants like Kellogg are selling IOUs as retailers take longer to pay.
Take a closer look at the fine print.
Photographer: Daniel Acker/Bloomberg
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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.