The following information about Douglas Corp.'s Accounts Receivable and Sales are presented below:
Year 2012-Beginning Balance of
Year 2012 -Ending Balance of
Year 2012 - Sales
Assumptions:
Sales growth will be equal to per year
turnover will stay constant throughout the forecast period
Required:
a.Using this information,forecast Douglas Corp.'s the growth in Accounts Receivable for years 2013-2017.
b.What problem does a constant A/R turnover assumption cause?
c.Provide a solution to the problem caused by a constant A/R turnover assumption.
Correct Answer:
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b.The constant A/R turnover assumpt...
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