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hello sir. just 2 questions:
1) why we do we calculating Receivable days and inv days and Payables days if there is Company’s policy writing the standards for the customers for example ( should be payed in 20 days. so receivables days is 20 and the others havent payed are bad debts)Or payables days is the days mentioned in the contract with the supplier at the beginning of the year. Isnt it? if its written 50 days, its 50 days, without the numbers and ratios showing another figure? Or is it only for the Control reasons we calculating these figures through Ratios?
(i dont understand where can i find days of the staying the inventories in the storage though (e.g. Inventory days) cause it depends on the Sales only, right? ( except WIP and Raw materials( these depending on the SPeed and quality of production lines)
2)why the chapters like Costing and Pricing ( more of Strategic controls and Objectives) are in paper F5 (job of Management Accountant), and working capital is in paper F9 (job of Financial Manager (more of Decision Making Phase and operating controls).
I mean Why isnt it vice versa?
1. Just because we might write on the invoices that payment is due in 20 days does not mean that everyone will pay in exactly 20 days!!!
I always pay invoices on the day I receive them. Other people might wait 30 days to pay – it does not mean that they never pay and so they are not irrecoverable debts. They are only irrecoverable (we stopped calling them bad debts many years ago) if they never ever pay!2. The management accountant is more responsible for short-term planning and decisions – things like find the costs of production next year in order to help decide on what selling price to charge next year.
The financial manager is more concerned with long-term planning and decisions, which includes making decisions on how to manage the working capital in the long-term (how it should be financed, what long-term policy we should have with regard to offering discounts for early payment, etc..)
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