Why is it advantageous for a company to finance its receivables?
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Why is it advantageous for a company to finance its receivables?
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- Does it make sense? Which of the two methods of estimating uncollectible provides for the most accurate estimate of the current net realizable value of the receivablesAnalysis of receivables method provides the most accurate estimate of the net realizable value of the receivables. The reason for it is that net realizable value is the net amount of receivables that an enterprise expects to receive from its debtors. Net realizable value is the balance of accounts receivable more than the provision for doubtful debts. The provision for doubtful accounts is a contra account to accounts receivable, thus reducing accounts receivables. if any account receivable collected after write off of 10000, then journal entry would be - Allowance for doubtful A/c Dr. 10000To Bad debt expense A/c 10000 The direct write-off method provides the correct results because it is write off based on current account receivables, which are not collected at the year-end.Why would a company chose to factor its receivables,given that it will get less money than the receivables areworth?Is it in the best interests of the company to borrow money?
- What's the connection between financial intermediaries and securitization? When securitization moves forward, what happens to the financial intermediaries involved?Answer the following questions in depth .... Isn't estimating bad debts a way of manipulating net income? How does a company keep control on these estimates? How does one go about determining if noncollectable receivables are within a reasonable range?What are the motives of Off-Balance-Sheet activities and its affect on bank's balance sheet?
