ARBUS102 Lecture 7: Week 4 Lecture 1
16 Feb 2017
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When we reserve a certain amount as bad debt, there is no cash transaction. Receivables turnover: is the process of selling and collecting accounts. Receivable turnover ratio: determines the average number of times this process occurs during the period. Days to collect: measures the average number of days from the time of sale is made on account to (cid:3049)(cid:3032)(cid:3045)(cid:3028)(cid:3034)(cid:3032) (cid:3041)(cid:3032)(cid:3047) (cid:3045)(cid:3032)(cid:3030)(cid:3032)(cid:3049)(cid:3028)(cid:3029)(cid:3032)(cid:3046) Days to collect = the time it is collected. The number of times receivables turn over during the period. A higher ratio means faster (better) turnover. Average number of days from sale on account to collection. A higher number means a longer (worse) time to collect. Chapter 7: inventories and costs of goods sold. Maintain a sufficient quantity to meet customers" needs. Minimize the cost of acquiring and carrying inventory. Finished goods that are ready to be sold. Manufacturing companies: companies that hold three types of inventory. Consignment inventory: are goods held on behalf of the owner.
