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

question 56

Essay

The following information about Douglas Corp.'s Accounts Receivable and Sales are presented below:
Year 2012-Beginning Balance of $\mathrm{A} / \mathrm{R}=\$ 791 \mathrm{M}$
Year 2012 -Ending Balance of $\mathrm{A} / \mathrm{R}=\$ 807 \mathrm{M}$
Year 2012 - Sales $=\$ 3,002 \mathrm{M}$
Assumptions:
Sales growth will be equal to $6 \%$ per year
$\mathrm{A} / \mathrm{R}$ 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.

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Definitions:

Equity Principles

Guidelines that ensure fairness and justice within processes, distributions, or treatments in various contexts.

Interactional Unfairness

The perception that the interpersonal treatment one receives is disrespectful or lacks dignity, often in the context of decision-making.

Equity Theory

A principle suggesting that individuals are motivated by fairness in their relationships, impacting their work attitude and behaviors.

Interactional Unfairness

A perception of injustice in the way individuals are treated during interpersonal interactions, affecting their feelings of respect and dignity.