Improving Cash Flow through Receivable Management Star Communications designs, manufactures, and sells telecommunication equipment, and provides...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Improving Cash Flow through Receivable Management Star Communications designs, manufactures, and sells telecommunication equipment, and provides services associated with their installation, operation, and maintenance in China, India, Korea, and Vietnam. During 2005, the company's share price traded as high as $23 per share. But, in January, 2005, the company disclosed that it would file its Form 10-K with the U.S. Securities and Exchange Commission late due to material internal control problems identified by its independent auditor, PricewaterhouseCoopers. One of the identified concerns related to the company's recording of revenue and the related accounts receivable. In response, the company's share price sank to $6 per share. Following are selected financial data from Star Communications' 2004 annual report: (billions) Net sales 2004 2003 $2.79 $1.96 Accounts receivable (net) 0.81 0.37 1. (a) Calculate Star Communications' receivable collection period for 2003 and 2004. Round to two decimal places. 2004 Receivable collection period 0 days 2003 0 days (b) Is the company's receivable management decreasing in quality, improving, or about the same? 2. If the company could improve its receivable collection period to the industry average of 60 days, how much additional cash flow from accounts receivable would have been generated in 2003 and 2004? In billions, rounded to three decimal places 2004 2003 Revised receivable balance $ 0 billion $ 0 billion Increase in cash flow from receivables $ 0 billion $ 0 billion Improving Cash Flow through Receivable Management Star Communications designs, manufactures, and sells telecommunication equipment, and provides services associated with their installation, operation, and maintenance in China, India, Korea, and Vietnam. During 2005, the company's share price traded as high as $23 per share. But, in January, 2005, the company disclosed that it would file its Form 10-K with the U.S. Securities and Exchange Commission late due to material internal control problems identified by its independent auditor, PricewaterhouseCoopers. One of the identified concerns related to the company's recording of revenue and the related accounts receivable. In response, the company's share price sank to $6 per share. Following are selected financial data from Star Communications' 2004 annual report: (billions) Net sales 2004 2003 $2.79 $1.96 Accounts receivable (net) 0.81 0.37 1. (a) Calculate Star Communications' receivable collection period for 2003 and 2004. Round to two decimal places. 2004 Receivable collection period 0 days 2003 0 days (b) Is the company's receivable management decreasing in quality, improving, or about the same? 2. If the company could improve its receivable collection period to the industry average of 60 days, how much additional cash flow from accounts receivable would have been generated in 2003 and 2004? In billions, rounded to three decimal places 2004 2003 Revised receivable balance $ 0 billion $ 0 billion Increase in cash flow from receivables $ 0 billion $ 0 billion
Expert Answer:
Answer rating: 100% (QA)
To calculate Star Communications receivable collection period for 2003 and 2004 we need to use the f... View the full answer
Related Book For
Financial Accounting An Introduction to Concepts, Methods and Uses
ISBN: 978-1133591023
14th edition
Authors: Roman L. Weil, Katherine Schipper, Jennifer Francis
Posted Date:
Students also viewed these accounting questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Norman Freight purchased a building for $1,100,000 and depreciated it on a straight-line basis over a 30-year period. The estimated residual value was $140,000. After using the building for 15 years,...
-
What is cloud-based supply chain management and how might it impact process integration?
-
What is an asset? A liability? Net worth, or capital?
-
What do you know about the mathematical value of the annual worth of a project under each of the following conditions? a. The present worth of the project is greater than 0 . b. The present worth of...
-
Consider the following LP problem: Maximize profit = 5X + 6Y Subject to 2X + Y 120 2X + 3Y 240 X, Y 0 (a) What is the optimal solution to this problem? Solve it graphically. (b) If a technical...
-
Calculate the magnitude of the force on the charge q, given that the square is 10.0 cm on a side and q 9a9b = +7.46 C and qc = qa = -7.46 C. = 2.00 C, given that N
-
Discuss the basic purpose waiting line models. Then, discuss several advantages and disadvantages of waiting line modeling and clearly explain the reasons for your choices.
-
You expect to receive $1,000 at the end of each of the next 3 years. You will deposit these payments into an account that pays 12 percent compounded annually. What is the future value of these...
-
Student A gets a motorized model airplane for her birthday. She flies it in a circle that has a radius of 36 m. If it has a period of 3 seconds, what is the velocity of the plane?
-
A. During 2018, Fossil INC had sales of $600,000, cost of goods sold of $450,000, administrative and selling expenses of $95,000, depreciation expense of $140,000 and interest expense of $70,000. The...
-
How does reliability shows in customer service management particularly in supermarket like T&T Supermarket and Real Canadian Superstore? How does competence shows in customer service management...
-
1) a) b) Assignment must be uploaded to Canvas as a pdf file or MS Word. It is ok to scan a hand-written document, but scan to pdf only (no jpeg or camera photo, etc.) Also, scan must be a single...
-
The Trp operon is a coordinately regulated group of genes (trpA-trpE) that are required for tryptophan biosynthesis in E. coli. Based on the figure above, which of the following correctly describes...
-
You have accepted the engagement of auditing the financial statements of the C. Reis Company, a small manufacturing firm that has been your auditee for several years. Because you were busy writing...
-
Refer to the preceding question. How will the retailer treat this lease under the new/proposed rules?
-
Exhibit 4.3 presents the balance sheet prepared by Svenson, a Swedish telecommunications firm, for Years 7 and 6. Svenson applies IFRS and reports its results in millions of Swedish kronor (SEK). In...
-
Veronica Regaldo creates a new business in Mexico on January 1, Year 8, to operate a retail store. Transactions of Regaldo Department Stores during January Year 8 in preparation for opening its first...
-
The truss shown in figure 1.30 has two elements. The members are made of the aluminum hollow square cross section. The outer dimension of the square is \(12 \mathrm{~mm}\), and the inner dimension is...
-
Solve the onedimensional heat conduction problem 6 using the RayleighRitz method. For the heat conduction problem, the total potential can be defined as Use the approximate solution...
-
Consider a system of rigid bodies connected by springs as shown in figure 2.20. The bodies are assumed to move only in the horizontal direction. Further, we consider only the static problem, and...
Study smarter with the SolutionInn App