Question
1. Blige Corporation had sales revenue of $12,000,000 in 2014 and $15,000,000 in 2015. Accounts receivable were $18,00,000 at the end of 2014 and $2000,000
1. Blige Corporation had sales revenue of $12,000,000 in 2014 and $15,000,000 in 2015. Accounts receivable were $18,00,000 at the end of 2014 and $2000,000 at the end of 2015.
Required: (a) Calculate the accounts receivable turnover ratio for 2014 and 2015.
(b) Has the management of accounts receivable improved or worsened from 2014 to 2015?
(c) What are the advantages and disadvantages of selling goods on credit?
(d) How much cash did Blige Corporation collect from its customers in 2015?
(e) If sales in 2016 were expected to be $22,500,000 what would you expect accounts receivable to be at the end of 2016?
(f) Does a major increase in accounts receivable create any cash management issues?
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