Your recommendations and the reasoning behind them should you use percent of credit sales or aging
Question:
Your recommendations and the reasoning behind them – should you use percent of credit sales or aging of receivables? (Some questions you may want to consider are: is the aging method the right choice for the company given the historical data? Should all the years be included in the analysis? Should you use mean or median to calculate the percentages? Are there any extreme observations that should not be included in the analysis? Do the number of customers matter in a given year? Does the balance of total receivables vary significantly and what do you conclude given these differences?)
Year | Total outstanding receivables | Percent of sales on account written off | Percent of outstanding receivables written off by Receivable age group | |||
0-30 | 31-60 | 61-90 | Over 90 | |||
2013 | $ 25,370,544.00 | 1.91% | 14.33% | 0.87% | 0.28% | 3.78% |
2014 | $ 25,380,096.00 | 2.86% | 0.00% | 2.06% | 3.15% | 7.27% |
2015 | $ 24,615,853.00 | 2.11% | 7.53% | 1.12% | 5.84% | 6.34% |
2016 | $ 34,151,769.00 | 2.04% | 0.00% | 1.72% | 3.56% | 4.32% |
2017 | $ 33,300,138.00 | 1.89% | 6.55% | 2.93% | 2.96% | 4.66% |
2018 (predicted) | $ 35,497,407.00 | 2.16% | 5.68% | 1.74% | 3.16% | 5.27% |
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson