Forecasted Receivables Case

Accounts payable days saw a major increase going from 49 days in ’93, to 65 days in ’94. Although Wiegandt has been flexible with credit terms, Baum is far exceeding the net 30 terms and is not taking advantage of any discounts.

One assumption that should be clearly analyzed is that the collection period is of 30 days net. Not always customers have the ability and willingness to pay off their debts in 30 days, some may take more time, and some could incur in bad debt.

This also would cause their average collection period to become 0, because they no longer need to collect credit payment from customers. Only a small percentage of the company’s sales have customers that buy for resale purposes, the majority sales are cash retail.

Of the total sales indicated, only 10 percent were expected to be for cash. Collections on the remainder were anticipated generally within 60 days of sale. In particular, recent experience had suggested that roughly one-half of credit sales were collected for during the month following the month of sale and that other one-half during the next subsequent month. Mr. Firr intended to use this pattern as the basis for his calculations.

The purpose of the paper is to provide a statistical analysis of overdue bills for Quick Stab Collection Agency (QSCA). The data will be taken from accounts closed over a six month period. The goal is to determine if a correlation between the type of account, the amount of the bill and the days to collection exists. To determine the existence of a correlation, regression analysis of several variables was completed. This regression analysis also included predictions. Further study also included descriptive statistical analysis, together with graphs. This analysis will show that the correlation exists between the type of account and the days to collection. It will

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

A periodic billing statement is required to be sent to the borrower every billing cycle. A billing cycle corresponds to the frequency

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

2. Magnetronics had $7,380 invested in accounts receivables at year-end 1999. Its average sales per day were $133,614 during 1999 and its average collection period was 55.23 days. This represented an improvement from the average collection period of 58.68 days in 1995.

Nonetheless, an improvement in age of receivables for a single company over multiple periods suggests a company is becoming more efficient or effective at managing its receivables (Bujaki & Durocher, 2012; Gibson, 2011).

4. Prepare a schedule of Net Cash Flow by month for the six month period beginning in March, using the

The firm’s accounts receivable ratio increased from 68.71 in 2006 to 74.56 in 2010. This means that it is taking Abbott almost six days longer to collect from its customers today than it did five years ago. Furthermore, the firm’s accounts payable days has decreased from 43.72 in 2006 to 38.22 in 2010. This means that Abbott is paying its suppliers 5½ days earlier today than it did in 2006. A change in the inventory ratio from 8.01 in 2006 to 11.03 in 2010 indicates that it is taking the firm longer to sell finished goods than it used to. The increase in the accounts receivable and inventory ratios, combined with a decrease in the accounts payable ratio, indicates poor working capital management and helps to explain why the firm has increased its holdings of cash and short-term investments. To correct this, Abbott’s managers should focus on collecting cash from its customers faster and delaying payments to its suppliers. To maximize its cash position, the firm would be best served by paying its suppliers in the same amount of time as it collects payment from its customers.

Average Collection Period ratio compliments the inventory turnover ratio to get a better idea of how well OPI manages converting credit sales into cash. The average collection period considers average sales (calculated from the income statement data) and accounts receivable, found in the balance sheet.

For Matthew Corporation, the average collection period is not really good as it is late by 18 days while compared to the Industry-norms ratio. Due to this evidence, it could directly show out the corporation only can receive those payments from debtor in a slower way.

Finally, the average debtors collection period of this company is longer than Sun’s in three years. The company should try to shorten the collection period from the customers to improve the efficiency ratio. The