Management and Organizational Studies 2285 Lecture Notes - Lecture 5: Deferral, Accounts Receivable

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2285
• Professor: Trevor Hunter

Document Summary

** (,000 x 6%) + recourse liability of ,000 (b) * (,000 + ,000 - ,500 + ,000) (e) Alternatively, the credit sales could be increased by the june 1. ,000 sales to a major customer, and the outstanding note. Receivable should then be included in determining the average accounts receivable balance. This reduces the turnover in 2014 to 5. 52 (,000 ,150), still an improvement over the 2013 ratio. (f) both liquidity ratios show improvement from 2013 to 2014. (g) * (,000 ,400 - ,000) factored receivable less decrease in cash received less due from factor. ** (,000 - ,000) additional loan less recourse liability. As demonstrated by the above recalculated ratio, if ,000 of the receivables had been assigned instead of ,000 factored, the current ratio in 2014 would be 2. 43 instead of 2. 86 as calculated above in (d). The accounts receivable turnover ratio would have shown a dramatic deterioration from 7. 42 under the factoring scenario to.