The following information about Douglas Corp.\'s Accounts Receivable and Sales a

Question

The following information about Douglas Corp.'s Accounts Receivable and Sales are presented below: Year 2015-Beginning Balance of A/R = $791M Year 2015 -Ending Balance of A/R = $807M Year 2015 - Sales = $3,002M Sales growth will be equal to 6% per year A/R turnover will stay constant throughout the forecast period Using this information, forecast Douglas Corp.'s the growth in Accounts Receivable for years 2016-2020. (please attach excel file) What problem does a constant A/R turnover assumption cause? Provide a solution to the problem caused by a constant A/R turnover assumption.

Explanation / Answer

a. Growth in accounts receivable for 2015 = 807 - 791 = $16M

Growth in accounts receivable as a % of sales = 16/ 3002 = 0.5330%

Year Sales ($) Growth in A/R % Growth in A/R ($M) 2016 3182.12 0.5330 16.96 2017 3373.05 0.5330 17.98 2018 3575.43 0.5330 19.06 2019 3789.96 0.5330 20.20 2020 4017.36 0.5330 21.41

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.