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Unformatted text preview: Furthermore, your sales discounts will increase to 2% of total sales revenue previous sales discounts of .5% of sales revenue. Also, your allowance for doubtful accounts must increase to be proportional to your new accounts receivable balance, thus increasing your potential for loss of profit. Although, in comparison with your ratios, competitor Nortel’s accounts receivable turnover rate is higher than your new sales discount effect. Nortel’s average collection period is 40 days, so I would say that the new sales discounts do not affect your liquidity enough to not convert....
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This note was uploaded on 11/29/2010 for the course ACC 331 taught by Professor Dr.lee during the Fall '10 term at Jefferson College.
- Fall '10