Working Capital Management Age of Receivables April 30, 20X1 Percent of Amount Due Month of Sales April March. February January Age of Account 0-30 31-60 61-90 91-120 Amounts $131,250 93,750 112,500 37,500 $375,000 Total receivables 100%

Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter9: Metric-analysis Of Financial Statements
Section: Chapter Questions
Problem 9.4.5P: Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of...
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Block, S., Hirt, G., & Danielsen, B. (2017). Foundations of Financial Management. New York, NY: McGraw-Hill Education. 16th edition.

Chapter 7, Problem #11:

Route Canal Shipping Company has the following schedule for aging of accounts receivable: 

A. Fill in column (4) for each month.  (Please see uploaded image of chart)

B. If the firm had $1,500,000 in credit sales over the four-month period, compute the average collection period. Average daily sales should be based on a 120 day-period.

C. If the firm likes to see it bills collected in 35 days, should it be satisfied with the average colleciton period?

D. Disregarding your answer to part C and considering the aging schedule for accounts receivable, should the company be satisfied?

E. What additional information does the againg schedule bring to the company that the average collection period may not show?

Thank you in advance!

Working Capital Management
Age of Receivables April 30, 20X1
Percent of
Amount Due
Month of Sales
April
March.
February
January
Age of Account
0-30
31-60
61-90
91-120
Amounts
$131,250
93,750
112,500
37,500
$375,000
Total receivables
100%
Transcribed Image Text:Working Capital Management Age of Receivables April 30, 20X1 Percent of Amount Due Month of Sales April March. February January Age of Account 0-30 31-60 61-90 91-120 Amounts $131,250 93,750 112,500 37,500 $375,000 Total receivables 100%
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