Illustrate and Clearly Explain How Profitable Businesses Can Become Bankrupt

question 24

Essay

Illustrate and clearly explain how profitable businesses can become bankrupt due to the mismanagement of their working capital.In your explanation, define what working capital is, along with its major components, as well as the difference between cash flow and profits.Finally, describe how businesses can mitigate this problem of going broke while still being technically profitable.

Recognize conditions under which the normal distribution can be used for making confidence interval estimates.

Analyze how changes in significance level (α) affect the confidence interval.

Address the relationship between sample data characteristics (mean, standard deviation) and population parameters estimation.

Interpret confidence interval outcomes in context to the population parameter being estimated.

---

Definitions:

Allowance for Doubtful Accounts

A reserve for accounts receivable that a company does not expect to collect in full, acknowledging some customers may not pay their debts.

Allowance for Doubtful Accounts

A contra-asset account used to create an estimated reserve for debts that may not be collected.

Bad Debts Expense

An expense reported on the income statement, representing the estimated amount of credit sales that are not expected to be collected.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of accounts receivable that may not be collectible.