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Sir there is a question hgr co 2009
In that question they have added 2 days of credit sale every month(month 1 2 3)
It means they have assumed that the previous receivables will also have to pay 2 days earlier right??
And if the 2 days reduction would have been only for the new customers then the 2 days of credit sale would have been directly added in month 3 only right???It says that staff training and operating procedure improvements which will reduce accounts receivable to the ave sector of 53 days.
A reduction of 12 days (65-53) which would take 6 months to achieve with an equal reduction in each month. So 12/6 means 2 days
So that means all accounts receivable on ave will be 53
Each rec day is 49.275 m / 365 = 135k so the reduction is 270k pm so the bank bal will improve by 270kBut sir any sales that will occur in January will provide inflow in march if 65 days is the receivables days
And if it changes to 63 days the 2 days increase should also occur in march
But why they have increased 2 days in January also?The question ask you to calculate the bank balance in 3 months time
1. no action is taken
2. If the finance managers ideas are implementedGot it sir
So sir the 2 question that asks for implementation of changes…in that the changes will also be implemented on previous receivables right??
Like the sales in december will have a 65 days credit period but after the changes implementation the december customers will have to pay in 63 daysI have already said
It says that staff training and operating procedure improvements which will reduce accounts receivable to the ave sector of 53 days.
A reduction of 12 days (65-53) which would take 6 months to achieve with an equal reduction in each month. So 12/6 means 2 days
So that means all accounts receivable on ave will be 53
Each rec day is 49.275 m / 365 = 135k so the reduction is 270k pm so the bank bal will improve by 270k
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