Question

Discuss the importance of tracking key metrics in accounts receivable and payable; what are those metrics?...

Discuss the importance of tracking key metrics in accounts receivable and payable; what are those metrics? And what are their relationship to cash flow and freeing up cash?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1)one of the most important, and frequently measured, metrics for judging AR performance is DSO which is the length of time it takes to collect the money owed to the business.

2)The measure of ADD provides insight into how effective AR processes are in collecting receivables on time. ADD is calculated as:

ADD = DSO – best possible DSO

3)Collective Effectiveness Index (CEI)

4)The ART ratio indicates cash flow and liquidity through a measurement of how frequently accounts receivable are turned into cash.

Accounts payable is a critical component to manage your cash flow. As your business grows, you may be spending money on different services for your business and you will receive invoices that need to get paid.

Accounts Payable Turnover Ratio = Total Purchases ÷ Average Accounts Payable

This ratio tellsus how frequently we pay our bills.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Explain/discuss of the tradeoff theories for current accounts (e.g., cash, inventory, accounts receivable, accounts payable)
Explain/discuss of the tradeoff theories for current accounts (e.g., cash, inventory, accounts receivable, accounts payable)
A firm has accounts receivable of $26,000, inventory of $38,000, and accounts payable of $21,000. If...
A firm has accounts receivable of $26,000, inventory of $38,000, and accounts payable of $21,000. If a new project is accepted, the estimated values are projected to be accounts receivable of $31,000, inventory of $29,000, and accounts payable of $24,000. What is the project's initial net working capital cash flow? Possible Answers: outflow of $4,000, outflow of $1,000, inflow of $3,000, inflow of $7,000
Based on the following data, what is the Current Ratio? Accounts payable........................ $     78,000 Accounts receivable......................
Based on the following data, what is the Current Ratio? Accounts payable........................ $     78,000 Accounts receivable...................     158,000 Payroll tax payable.....................      15,000 Cash...........................................     49,000 Inventory.....................................     148,000 Goodwill......................................     160,000 Short Term Investments................      108,000 Notes payable (short-term)..........      65,000 Property, plant, and equipment..... 1,800,000 Prepaid Expenses.......................       15,000 a. 1.99 b. 320,000 c. 2.68 d. 3.13 e. 3.03
\The following narratives describe transactions impacting cash, accounts receivable, accounts payable, revenues, and selected expense accounts.  Use...
\The following narratives describe transactions impacting cash, accounts receivable, accounts payable, revenues, and selected expense accounts.  Use T-accounts to analyze this activity and determine the ending balances for cash, accounts receivable and accounts payable. Record your answers in Blackboard. At the beginning of the period, accounts receivable totaled $54,300, while accounts payable totaled $31,275.  The company started the period with $85,000 in cash. Transaction #1 Services were provided to customers for cash in the amount of $15,230. Transaction #2 Supplies were purchased...
Calculate the accounts receivable period, accounts payable period, inventory period, and cash conversion cycle for the...
Calculate the accounts receivable period, accounts payable period, inventory period, and cash conversion cycle for the following firm: Income statement data: Sales 5,000 Cost of goods sold 4,200 Balance sheet data: Inventory 550 Accounts receivable 110 Accounts payable 270
Jessica's Boutique has cash of $40, accounts receivable of $66, accounts payable of $180, and inventory...
Jessica's Boutique has cash of $40, accounts receivable of $66, accounts payable of $180, and inventory of $150. What is the value of the quick ratio? .37 2.01 1.42 .83 .59
Cash Conversion Cycle. Calculate the (a) accounts receivable period, (b) accounts payable period, (c) inventory period,...
Cash Conversion Cycle. Calculate the (a) accounts receivable period, (b) accounts payable period, (c) inventory period, and (d) cash conversion cycle for the following firm: Income Statement Data:             Sales                            5,000             Cost of goods sold      4,200             Balance sheet data: Beginning of Year End of Year Inventory 500 600 Accounts receivable 100 120 Accounts payable 250 290 Calculate the accounts receivable period: Response (show formula and numerical values): Calculate the accounts payable period Response (show formula and numerical values):...
Using the following information, and a 360-year. Calculate the accounts receivable period, accounts payable period, inventory...
Using the following information, and a 360-year. Calculate the accounts receivable period, accounts payable period, inventory period, and cash conversion cycle for the following firm: Income statement data: Sales 5,000 Cost of goods sold 4,200 Balance sheet data: Beginning of Year End of Year Inventory 500 600 Accounts receivable 100 120 Accounts payable 250 290
2014 2015 Accounts payable 440 380 Accounts receivable, net 1,810 2,040 Accruals 95 120 Cash 120...
2014 2015 Accounts payable 440 380 Accounts receivable, net 1,810 2,040 Accruals 95 120 Cash 120 100 Capital surplus 1,120 1,290 Common stock 1,000 1,100 Cost of Goods Sold 6,610 6,420 Depreciation expense 1,550 1,650 Interest expense 140 170 Inventory (end of year) 5,720 5,530 Long-term debt 3,890 4,150 Net fixed assets 7,530 8,050 Net sales 10,750 11,050 Notes payable 800 740 Operating expenses (excluding depreciation) 1,680 1,780 Retained earnings 7,835 7,940 Taxes 250 360 22. Cash flow from operating...
Gatti Corporation reported the following balances at June 30.   Accounts Payable $105   Accounts Receivable 95   Accumulated...
Gatti Corporation reported the following balances at June 30.   Accounts Payable $105   Accounts Receivable 95   Accumulated Depreciation—Equipment 45   Cash 15   Cash Equivalents 20   Common Stock 150   Depreciation Expense 35   Dividends 5   Equipment 350   Notes Payable (long-term) 110   Notes Payable (short-term) 20   Petty Cash 25   Restricted Cash (short-term) 20   Retained Earnings 50   Salaries and Wages Expense 425   Service Revenue 530   Unearned Revenue 45   Utilities Expense 65 Required: 1. What amount should be reported as “Cash and Cash Equivalents”? 2. Prepare a...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT