Accounts Receivables

1. Factor Affecting The Size Of
Investment In Receivables
“Any fool can lend money, but it
takes a lot of skill to get it back ”
Presentation By:
Mohit Garg
BBA 6th Sem

2. Meaning of Receivables
• Receivable comprises both debtors and B/R.
• Receivables is known as when firm makes an ordinary sale of
goods or service and does not receive payment , it grant trade
credit and creates accounts receivables which would be
collected in future.
• Also Known as Debtors, Book Debts, Accounts Receivables

3. Factors Influencing size of Receivables
Factors
General
Specific

4. General Factors
• Nature and Form of Business
• Management outlook
• Volume of Business
• General Economic Conditions
• Inflation
• Availability of funds

5. Specific Factors
1) Level of credit Sales
Example: Ist year IInd year
Credit Sales 10,00,000 15,00,000
Collection Period 3 Months 3 Months
Average Receivables 2,50,000 3,75,000
(Credit Sales X Collection Period)
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 Investment in Receivables rise in the proportion of Increase in
credit sales.

6. 2) Credit Terms
Example: Ist year IInd year
Credit Sales 9,00,000 9,00,000
Collection Period 3 Months 4 Months
Average Receivables 2,25,000 3,00,000
(Credit Sales X Collection Period)
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Specific Factors

7. 3) Terms of Sale
Example: Ist year IInd year
Cash Sales 4,00,000 1,00,000
Credit Sales 6,00,000 9,00,000
Collection Period 3 Months 4 Months
Average Receivables 1,50,000 3,00,000
(Credit Sales X Collection Period)
12
Specific Factors

8. 4) Stability of Sales
Specific Factors