Accounts Receivable Have Been Grouped into the Following States

question 41

Essay

Accounts receivable have been grouped into the following states:
State 1: Paid
State 2: Bad debt
State 3: 0-30 days old
State 4: 31-60 days old
Sixty percent of all new bills are paid before they are 30 days old. The remainder of these go to state 4. Seventy percent of all 30 day old bills are paid before they become 60 days old. If not paid, they are permanently classified as bad debts.
a.Set up the one month Markov transition matrix.
b.What is the probability that an account in state 3 will be paid?

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Definitions:

Networking

The process of engaging with others to share information and build professional or social networks.

Selling Process

A series of steps followed by a salesperson to facilitate the purchase of a product or service by a customer.

Prospecting

The process of identifying potential customers, clients, or buyers for a business's products or services.