Receivables management, Managerial Accounting

In the earlier unit, we have studied how firms determine their requirements for current assets and manage their holdings in cash and marketable securities. Inside a classical manufacturing company the debtors to net asset ratio vary from 20 to 25 percent that is a considerable investment of funds. The effective management of this benefit will have an important effect on the company's profitability. The receivable or debtors arise because of credit sales that is undertaken so as to encourage customers to purchase services or goods. Accounts receivable utilize funds, and tying up funds in these investments has a related cost that must be considered along with the advantages from enhanced sales of services and goods. In this section we are going to discuss the different issues included in management decisions of extending credit as accounts receivable.

Posted Date: 4/9/2013 5:09:29 AM | Location : United States

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