Toys for Big Boys sells snowmobiles, personal watercraft, ATVs, and the like. Recently, the credit manager of
Question:
Management was thrilled at year end when sales doubled. However, accounts receivable quadrupled and cash flow halved. The company's average collection period increased from 30 days to 120 days.
Instructions
In a memo to management, explain the financial impact of allowing the sales staff to manage the credit function. Has the business assumed any additional credit risk? What would you recommend the company do to better manage its increasing accounts receivable?
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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Related Book For
Accounting Principles Part 2
ISBN: 978-1118306796
6th Canadian edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow
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