Company change the extent to which it factors or securitizes

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Search on the Internet for the 2008 annual report for Sanofi-Aventis. Find the accounts receivable footnote.

Required:

1. Sanofi-Aventis subtracts "impairment" from the gross value of accounts receivable to obtain the net value. Interpret the impairment of (€88) in 2008 in terms of how that amount would typically be described in U.S. GAAP.

2. To what extent does Sanofi-Aventis factor or securitize accounts receivable? How do you know?

3. Assume that Sanofi-Aventis decided to increase the extent to which it securitizes its accounts receivable, changing to a policy of securitizing accounts receivable immediately upon making a sale and treating the securitization as a sale of accounts receivable. Indicate the likely effect of that change in policy on:

a. Accounts receivable in the period of the change.
b. Cash flow from operations in the period of the change.
c. Accounts receivable in subsequent periods.
d. Cash flow from operations in subsequent periods.

4. Given your answers to requirement 3, could a company change the extent to which it factors or securitizes receivables to create one-time changes in its cash flow? Explain.

Reference no: EM131001185

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