A chain of retail stores located in Kansas and Nebraska has requested a loan from the bank at which you work. The balance sheet of the retail chain shows significant accounts receivable related to its in-house credit card. You have been assigned to evaluate these receivables.
1. What questions concerning the quality of these receivables can you answer by analyzing the retailer’s financial statements?
2. What additional questions would you raise, and what information would you request from the retailer to answer these questions?