When Cow Breeder Association, Inc. was set up by Fred Vaca, he hired his aging spinster aunt, Morena Santiago, to be its finance manager. Cow Breeder business involved selling yearlings to farmers cooperatives who were often uncooperative when it came to paying their bills. Santiago kept track of the paying behavior of each customer in the area by preparing her own aging schedule. The Cooperative set up the company only last May. Cow Breeder purchased stocks of yearlings from Masbate and resold them to cooperatives located all over the province. Its total accounts receivable as of September 30 was at P152,000. A breakdown of this accounts receivable according to the month of the credit sale is as follows:

Month of Sales Amount

September 10,000.00

August 25,000.00

July 36,000.00

June 49,000.00

May 32,000.00

Cow Breeder sold yearlings to the cooperatives on 30-day credit term. When asked by the management to report on the status of the receivable. Santiago said Our collection rate is 100%. It takes one year to grow yearlings before they are ready for the market. The cooperatives maybe slow payers but they do pay. Remember, Im in control of this company! Management noted Santiagos comment. It also noted that cash was dwindling fast and that month-to-month sales of yearlings were also rapidly declining.

Questions: a.) What percentage of accounts receivable was: less than 30 days old? 30-60days old? 90-120 days old? b.) Estimate the average accounts receivable collection period of the company.

c.) How efficient was credit management at Cow Breeders Association?