Page 69 - Finance for Non-Financial Managers

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Finance for Non-Financial Managers
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❏ A large amount of accounts receivable may look good on
the balance sheet, but their collectibility is the most impor-
tant issue, and that’s not always apparent by simply look-
ing at the total. Look at “Allowance for bad debts” and the
customer-by-customer details to better understand the true
quality of this balance.
❏ Inventory represents a constant management challenge
and a relatively high-risk area for losses unless inventory
management practices are solid. There are lots of ways
inventory can cost a company money, including deteriora-
tion, obsolescence, and breakage.
❏ Accounts payable is the largest source of day-to-day
financing for most companies. Delaying payment can pro-
vide temporary relief for cash-strapped companies, thus
causing accounts receivable collection problems for their
creditors.