1. What are the % change of Revenues, Receivables, and AFDA respectively: *

A) 80%; 17.7%; 30%

B) 30%; 17.7%; 80%

C) -23%; -15%; -44.4%

D) None of the above

2. What is the best describe regarding the relationship between net sales, actual A/R & AFDA of Puma company? *

A) Normal relationship

B) Abnormal relationship

C) Positive relationship

D) Both (A) & (C)

E) Can't determine

3. When the analyst examined Nike company data, the following results could be concluded: *

A) Possible manipulation of AFDA could be occurring in order to decrease bad debt expenses on income statement and thus increase profits.

B) The company was able to increase its sales but without being able to make improvements to its collection policy.

C) The company estimates that more receivables will be accounted as uncollectable.

D) Both (B) & (C)

E) None of the above

4. Assume that the company improves its collection policy without affecting its sales progress, then: *

A) The companys % change in AFDA should reveal a large positive change of the account.

B) The % change of the companys net account receivable will be larger than the % change of its net revenues.

C) The companys % change in AFDA should reveal a large negative change of the account.

D) The % change of the companys total account receivables will be smaller than the % change if its net revenues.

E) None of the above

Problem 2: Puma, Inc. is one of the nation's sports retailers. The company has the following balance sheet & income statement accounts for the years ending December 31, 2019 and 2020: 2019 2020 Sales $12,000 $15,600 Account Receivable, net 4,800 5,650 Allowance for doubtful accounts 250 450