Because of the current poor economic environment, ABC Company's recent performance has suffered. For the current year, the sales director has decided to extend the credit terms of their customers from 30 to 90 days in order to increase sales. The sales director reviewed the income statement for the current year and saw that the company's turnover and net profit had increased over the previous year, as he expected. The balance sheet of ABC Company showed that this year's bank balance was lower than last year, and the statement of cash flow showed lower cash flow from operating activities. The sales director doesn't understand the above scenario since he expected earnings and turnover to rise in the current year, as well as cash flow and bank balance.

if you were the financial controller, would you please explain the above circumstances to allay the sale director's concerns, and would you disagree with the action taken by the sale director.

Answer rating: 100% (QA)

As the financial controller I would first address the concerns of the sales director and then provide an analysis of the situation Explanation of Circ... View the full answer