Evaluating firms short-term financial management practices


Problem:

The CFO has been evaluating his firm’s short-term financial management practices. Below are its uncollected balance percentages for the most recent quarter as well as for the previous year's percentages.

Month

Most Recent Year

Previous Year

Jan

12%

18%

Feb

22%

22%

Mar

47%

41%

Total

81%

81%


Neither the credit policy of the firm nor its collection strategies have changed, and its sales mix is identical to last year's. Based on its numbers, what can the CFP conclude about the firm’s collection experience?  More specifically, has the collection experience improved or declined over the analysis period and you must specifically explain your answer.

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Finance Basics: Evaluating firms short-term financial management practices
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