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Collection experience improved or declined over period?

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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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Your tutorial is 219 words and explains that collections is worse and why. Two reasons (one good and one bad) are given for the shift.

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The experience is worse in the recent year. Even though it seems "cumulatively" the total is 81%, this is not really something that can be accumulated. The unpaid amounts at year end replace the prior periods unpaid amounts. That is different from income statement amounts where the profits from prior quarters accumulated to create a year to ...

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Carol Sargent, PhD
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  • MSc, University of Virginia
  • PhD, Georgia State University
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