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The Following Information About Douglas Corp A/R=$791M\mathrm { A } / \mathrm { R } = \$ 791 \mathrm { M }

question 53

Essay

The following information about Douglas Corp.'s Accounts Receivable and Sales are presented below:
Year 2012-Bepining Balance of A/R=$791M\mathrm { A } / \mathrm { R } = \$ 791 \mathrm { M }
Year 2012 -Eaflin Balance of A/R=$807M\mathrm { A } / \mathrm { R } = \$ 807 \mathrm { M }
Year 20122012 - Sales =33,002M= 33,002 \mathrm { M }
A5sumptians:
Sales growth will be equal to 6%6 \% per year
A/R turnover will stay canstant thraughout the farecast periot
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.

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