Financial Analysis of Receivables
A chain of retail stores located in Kansas and Nebraska has requested a loan from the bank at which you work. The balance sheet of the retail chain shows significant accounts receivable related to its in-house credit card. You have been assigned to evaluate these receivables.
Required:
What questions concerning the quality of these receivables can you answer by analyzing the retailer’s financial statements?
Receivables:
The receivables in the business refer to the amount of money which is due to be received from some other business or customer.
Credit Cards:
The credit cards are the form of factors that collects money instantly in an electronic mode. In-house credit cards are those which a company issues to increase sales on credit.
The questions concerning the receivables quality by analyzing the financial statements of retailer.
In the given case, it is given that there is a chain of retail stores located in Kansas and Nebraska has requested a loan from bank. Before providing such loan, the balance sheet of the retail store is analyzed which shows receivables related to its in-house credit cards.
Now, on the basis of given information, for evaluation of receivables following questions can be raised:
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