Bus 20 Ch6 - Revenue,Receivables,andCash F...

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Mathematical Applications for the Management, Life, and Social Sciences
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Chapter 6 / Exercise 18
Mathematical Applications for the Management, Life, and Social Sciences
Harshbarger
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Reporting and Interpreting Sales  Revenue, Receivables,  and  Cash  F ounded  by  then  University  of  California, Santa  Barbara,  student Doug Otto,  Deckers  Outdoor  is  best known  for  its  Teva  sports sandals  and  UGG  sheepskin boots Deckers  has  become  a major player  in  the casual,  outdoor,  and  athletic footwear market  by  building  on  the needs  of  hikers, trail runners, kayakers,  surfers,  and  whitewater rafters for  comfort, function,  and  performance Its growth strategy requires building brand  recogni- tion  by  developing  and  introducing  additional  innovative footwear that satisfies the  com- pany's  high  standards "Building  the brands allows  Deckers  to maintain a loyal  consumer  following  and  penetrate new markets.  It  also  has  allowed Deckers to continue to grow  dur- ing the worst recession  in  more than  25 years  .  There  is  a second  key  component to Deckers's  successful  growth strategy Success  in  the ultracompetitive footwear market requires careful matching  of  production  sched- ules  to customers'  needs  and  careful  management  of  customer receivables Deckers's  successful focus  on  brand  development,  product  innovation,  and  working capital  man- agement  has  allowed the company to report the highest gross  profit  and  net income  in  its history.  Learning  Objectives  After studying this chapter, you should be able to:  6-1  Apply the revenue realization principle  to  determine  the  accepted time  to  record sales revenue  for  typical retailers, wholesalers, manufacturers,  and  service companies.  p.  278  6-2  Analyze the  impact  of  credit card sales, sales discounts, and sales  returns  on  the amounts reported  as  net sales.  p.  279  6-3  Estimate, report,  and  evaluate the  effects  of  uncollectible accounts  receivable  (bad  debts)  on  financial statements.  p.  283  6-4  Analyze  and  interpret the receivables turnover ratio  and  the effects  of  accounts receivable  on  cash flows.  p.  290  Report, control,  and  safeguard cash  .  p.  293 
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Mathematical Applications for the Management, Life, and Social Sciences
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Chapter 6 / Exercise 18
Mathematical Applications for the Management, Life, and Social Sciences
Harshbarger
Expert Verified
UNDERSTANDING   THE  BUSINESS  Planning  Deckers's  growth  strategy  requires  careful  coordination  of  sales  activities,  as  well  as  cash  collections from customers Much  of  this  coordina- tion  revolves  around allowing  consumers  to  use credit cards,  providing busi- ness  customers  discounts  for  early payment,  and  allowing sales  returns  and  allowances  under certain circumstances-strategies  that  motivate customers  to  buy  its products  and  make  payment  for  their  purchases.  These  activities  affect 

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