RECEIVABLES CASE STUDY

Complete Case 28, Foster Pharmaceuticals:

Review Case 28, pages 193196, FOSTER PHARMACEUTICALS.

Write a case review that addresses receivables management. Your review should be approximately three pages.

CASE 28	Student Version					Copyright 2014 Health Administration Press
10/17/2013
	FOSTER PHARMACEUTICALS
	Receivables Management
This case focuses on the usefulness of the average collection period (ACP), the aging
schedule, and the uncollected balances schedule in monitoring a business's receivables.
The model uses sales forecasts and collections expectations to calculate ACP and to
generate both aging schedules and uncollected balances schedules. In addition, the
model calculates the cost of carrying receivables.
The model consists of a complete base case analysisno changes need to be made
to the existing MODEL-GENERATED DATA section. However, all values in the student
version INPUT DATA section have been replaced with zeros. Thus, students must
determine the appropriate input values and enter them into the model. These cells are
colored red. When this is done, any error cells will be corrected and the base case
solution will appear. Note that the model does not contain any risk analyses, so students
will have to create their own if required by the case. Furthermore, students must
create their own graphics (charts) as needed to present their results.
INPUT DATA:				KEY OUTPUT:
							End of Mar	End of Jun
Sales Forecast:				Accounts Receivables Balance:			$0	$0
Month	Gross Sales
January	$0			Average Collection Period (Days):			#DIV/0!	#DIV/0!
February	0
March	0			Aging Schedules:
April	0			0 - 30 days			#DIV/0!	#DIV/0!
May	0			31 - 60 days			#DIV/0!	#DIV/0!
June	0			61 - 90 days			#DIV/0!	#DIV/0!
Sales Mix Forecast:				Uncollected Balances Schedule:
Payer	% of Sales			January (April) remaining rec / sales			#DIV/0!	#DIV/0!
Large Retail Chain 1	0%			February (May) remaining rec / sales			#DIV/0!	#DIV/0!
Large Retail Chain 2	0%			March (June) remaining rec / sales			#DIV/0!	#DIV/0!
Regional Drug Store	0%			Quarter remaining rec / sales			#DIV/0!	#DIV/0!
Small Grocery Chain	0%
				Quarterly Carrying Costs of Receivables:			$0	$0
Assumed Collection Pattern:
Payer	0-30 days	31-60 days	61-90 days
Large Retail Chain 1	0%	0%	0%
Large Retail Chain 2	0%	0%	0%
Regional Drug Store	0%	0%	0%
Small Grocery Chain	0%	0%	0%
Other Inputs:
Periodic (quarterly) interest rate		0.0%
Contribution margin		0.0%
MODEL-GENERATED DATA:
Average Collection Period:
	Remaining Uncollected Balance at Period End
Payer	30 days	60 days	90 days
Large Retail Chain 1	100%	100%	100%
Large Retail Chain 2	100%	100%	100%
Regional Drug Store	100%	100%	100%
Small Grocery Chain	100%	100%	100%
End of March:						End of June:
Accounts receivables balance				$0		Accounts receivables balance				$0
Average daily sales				$0		Average daily sales				$0
Average collection period (days)				#DIV/0!		Average collection period (days)				#DIV/0!
Aging Schedules:
End of March:						End of June:
		Age of Accounts in Days						Age of Accounts in Days
Payer	0-30	31-60	61-90	Total		Payer	0-30	31-60	61-90	Total
Large Retail Chain 1						Large Retail Chain 1
Accts Rec	$0	$0	$0	$0		Accts Rec	$0	$0	$0	$0
%	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!		%	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
Large Retail Chain 2						Large Retail Chain 2
Accts Rec	$0	$0	$0	$0		Accts Rec	$0	$0	$0	$0
%	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!		%	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
Regional Drug Store						Regional Drug Store
Accts Rec	$0	$0	$0	$0		Accts Rec	$0	$0	$0	$0
%	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!		%	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
Small Grocery Chain						Small Grocery Chain
Accts Rec	$0	$0	$0	$0		Accts Rec	$0	$0	$0	$0
%	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!		%	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
Total End of March						Total End of June
Accts Rec	$0	$0	$0	$0		Accts Rec	$0	$0	$0	$0
%	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!		%	#DIV/0!	#DIV/0!	#DIV/0!	#DIV/0!
Uncollected Balances Schedules:
End of March:						End of June:
			Accts Rec	Remaining					Accts Rec	Remaining
Payer	Month	Sales	for month	Rec/Sales		Payer	Month	Sales	for month	Rec/Sales
Large Retail Chain 1						Large Retail Chain 1
	January	$0	$0	#DIV/0!			April	$0	$0	#DIV/0!
	February	$0	$0	#DIV/0!			May	$0	$0	#DIV/0!
	March	$0	$0	#DIV/0!			June	$0	$0	#DIV/0!
	Quarter	Total	$0	#DIV/0!			Quarter	Total	$0	#DIV/0!
Large Retail Chain 2						Large Retail Chain 2
	January	$0	$0	#DIV/0!			April	$0	$0	#DIV/0!
	February	$0	$0	#DIV/0!			May	$0	$0	#DIV/0!
	March	$0	$0	#DIV/0!			June	$0	$0	#DIV/0!
	Quarter	Total	$0	#DIV/0!			Quarter	Total	$0	#DIV/0!
Regional Drug Store						Regional Drug Store
	January	$0	$0	#DIV/0!			April	$0	$0	#DIV/0!
	February	$0	$0	#DIV/0!			May	$0	$0	#DIV/0!
	March	$0	$0	#DIV/0!			June	$0	$0	#DIV/0!
	Quarter	Total	$0	#DIV/0!			Quarter	Total	$0	#DIV/0!
Small Grocery Chain						Small Grocery Chain
	January	$0	$0	#DIV/0!			April	$0	$0	#DIV/0!
	February	$0	$0	#DIV/0!			May	$0	$0	#DIV/0!
	March	$0	$0	#DIV/0!			June	$0	$0	#DIV/0!
	Quarter	Total	$0	#DIV/0!			Quarter	Total	$0	#DIV/0!
Total End of March						Total End of June
	January	$0	$0	#DIV/0!			April	$0	$0	#DIV/0!
	February	$0	$0	#DIV/0!			May	$0	$0	#DIV/0!
	March	$0	$0	#DIV/0!			June	$0	$0	#DIV/0!
	Quarter	Total	$0	#DIV/0!			Quarter	Total	$0	#DIV/0!
Quarterly Carrying Costs of Receivables:
End of March:						End of June:
Large Retail Chain 1			$0			Large Retail Chain 1			$0
Large Retail Chain 2			$0			Large Retail Chain 2			$0
Regional Drug Store			$0			Regional Drug Store			$0
Small Grocery Chain			$0			Small Grocery Chain			$0
Total			$0			Total			$0
										END