Accounts receivable are too high for Branch A in Exhibit 12.16. One sales analyst recommends giving credit and collection responsibilities to the sales force. Sales reps would be provided with delinquency objectives aimed at reducing accounts receivables by 20 percent. Those meeting their objectives would earn an additional 1 percent of sales for commission. Will this work? Another analyst contends that since the sales force has no training in credits and collections, accounts receivable should be excluded from ROAM calculations. Do you agree? What would happen to Branch A's ROAM if accounts receivable were excluded? Meme tech is achieved and the second the those analyses is the aut s he may be of the tum produced on the assessed in each v ing and controlling alon dements of the personal ROMCebution as a percentage of sales The formula indicates that the return to a segment of the impedeither by increasing the petit margin on sales or by same pe margin and increasing the turnover rate. The for 500 000 Cost of Goods Les Variable branche Office Branch Contribution to hit 750000 100% Camisa Percentage of Sales Turnover Branch Percentage Return on Managed EXHIBIT 12.16 Analysis of return on assets managed $2,500,000 2,000,000 500,000 (20%) $1,500,000 1,275,000 225,000 (15%) Sales Cost of Goods Sold Gross Margin Less Variable Branch Expenses Salaries Commissions Office expenses Travel and entertainment 155,000 25,000 30,000 40,000 250,000 250,000 80,000 10,000 20,000 20,000 130,000 95,000 Branch Contribution to Profit Branch investments Accounts receivable Inventories 500,000 750,000 1.250,000 10.0% 2.0 20.0% 150,000 225,000 375,000 6.3% 4.0 Earnings as a Percentage of Sales Turnover Branch Percentage Return on Assets Managed 25.2%