Question
UTStarcom, Inc. designs, manufactures, and sells telecommunication equipment, and provides services associated with their installation, operation, and maintenance in China, India, Korea, and Vietnam. During
UTStarcom, Inc. designs, manufactures, and sells telecommunication equipment, and provides services associated with their installation, operation, and maintenance in China, India, Korea, and Vietnam. During 2005, the companys share price traded as high as $23 per share. But, in January, 2005, the company disclosed that it would file its Form 10-K with the U.S. Securities and Exchange Commission late due to material internal control problems identified by its independent auditor, PricewaterhouseCoopers. One of the identified concerns related to the companys recording of revenue and the related accounts receivable. In response, the companys share price sank to $6 per share. Following are selected financial data from UTStarcoms 2004 annual report:
(billions) | 2004 | 2003 |
---|---|---|
Net sales | $2.56 | $1.78 |
Accounts receivable (net) | 0.81 | 0.37 |
2. If the company could improve its receivable collection period to the industry average of 60 days, how much additional cash flow from accounts receivable would have been generated in 2003 and 2004? In billions, rounded to three decimal places :
2004 | 2003 | |||
---|---|---|---|---|
Revised receivable balance | billion | billion | ||
Increase in cash flow from receivables | billion | billion |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started