One risk to the strategic plans of Big Red Bicycle (BRB) is bad debt and poor cash flow due to large trade debtors balances. Consider the following:

-BRG offers 30 day terms to debtors

-BRB do not train sales staff on credit terms

-Credit terms are not enforced

-The warehouse rent has been increased by 15%

-Many bicycles need to be thrown out if parts rust; this problem exacerbates the problem of waste expense.

You have the following information from the Statement of Financial Position.

Account	$
Trade debtors	362,500
Trade creditors	80,000
Opening stock	100,000
Closing stock	300,000
Purchases	1,000,000

From the Statement of Financial Performance information given calculates the following.

a. The average debtor day’s ___________

b. The average creditor day’s __________

c. The average stock turnover _________

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Consider the existing BRB ageing debtor’s budget.

Prepare a summary outlining measures that needs to be taken to improve the financial management of the business and cash flow.

To support your recommendations, refer to data sources, organizational needs, and analytical techniques, for example:

-statement of financial performance

-ledger accounts

-scenario information

-ageing debtors budget

 -ratios

Answer rating: 100% (QA)

1 Calculation The average debtors days 46 days Average Debtors Days Trade Debtors Sales x 365 362500 ... View the full answer