Working Capital - A/R

Question 1

A/R management

Answer 1

Once red with 2 things - 1) conditions leading to recognition of receivables; 2) Process that results in elimination of collectibles

Firms selling on credit must establish general terms under which credit will be granted (total credit period, discounts for early payment, penalty for late payment)

Objective - maximize profit, not to minimize losses

Monitoring AR continuously; aggregate level uses averages and ratios

Individual account level uses aging of A/R