AFM373 Lecture Notes - Lecture 9: Accounts Receivable, Inventory Turnover, Accounts Payable

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM373
• Professor: Alan Douglas

Document Summary

Jones electrical distribution (jed) was founded by nelson jones and dave verden in 1999. The demand for jed"s goods mainly depe(cid:374)d o(cid:374) the seaso(cid:374)alit(cid:455) of its (cid:272)lie(cid:374)teles" (cid:271)usi(cid:374)esses. As a result, jed"s (cid:271)usiest seaso(cid:374) is duri(cid:374)g the spri(cid:374)g a(cid:374)d su(cid:373)(cid:373)er (cid:449)he(cid:374) (cid:449)eather is (cid:373)ost suitable for construction work. Jed competes in a highly competitive market where it has to compete on price and employ salespeople who would directly visit its clienteles at their workplace. In addition, jed pays its salespeople on commission-based salary and keeps its expenses at the minimum in order to minimize costs. Jo(cid:374)es" (cid:373)ai(cid:374) (cid:271)usi(cid:374)ess strategy is to aggressively grow the business. This has caused a huge dispute between jones and verden in 2003, which eventually led to the buyout of verde(cid:374)"s shares for. This amount is to be paid in instalments of ,000 per month plus 8% interest per year.