Purchase Solution

Regression Model to Predict Accounts Receivable

Not what you're looking for?

Ask Custom Question

You are the CFO for Mark's Company. Intuitively you know that there is a relationship between sales and collections in your company. You want to design a model that will allow the company to predict collections.

Historical credit sales data is shown for the current month, March, and the previous months. As the CFO you will employ linear regression analysis to arrive at visual presentation of the AR collection relationships and equations to predict collections for current, one month prior, and two months prior, based on the specified sales levels.

1) Chart the collections for current, one month prior, and two months prior, based on the related level of sales.
2) Comment on the relationship of collections to credit sales based on the charts that you created. For example, what value does this information have to the company? What does y and R2 tell us?
3) Use the trend function to predict sales for
August
September
October
November
December
4) For your Aug-Dec forecast predict the collections for each month.
5) Document your model so that you can give it to your AR Manager to use for planning.

Note: The above steps are guidelines, you may expand and enhance this project in any way you deem appropriate to accomplish your mission as the CFO and communicate to potential users. The project will be graded on the accuracy of calculations, knowledge and understanding of the modeling topic, demonstration of Excel skills, and presentation, in relation to these specified criteria, and with consideration of the end-product to those of peers.

Attachments
Purchase this Solution
Solution Summary

This solution employs linear regression analysis to arrive at visual presentation of the AR collection relationships and equations to predict collections for current, one month prior, and two months prior, based on the specified sales levels.

Solution Preview

Dear Student,

I have created the charts, trend lines and regression equations for you and explained how you can create them in the future. The linear regression assumes that there is a linear relationship between the dependent variable and the independent ...

Purchase this Solution
Free BrainMass Quizzes
Know Your Statistical Concepts

Each question is a choice-summary multiple choice question that presents you with a statistical concept and then 4 numbered statements. You must decide which (if any) of the numbered statements is/are true as they relate to the statistical concept.

Measures of Central Tendency

Tests knowledge of the three main measures of central tendency, including some simple calculation questions.

Terms and Definitions for Statistics

This quiz covers basic terms and definitions of statistics.

Measures of Central Tendency

This quiz evaluates the students understanding of the measures of central tendency seen in statistics. This quiz is specifically designed to incorporate the measures of central tendency as they relate to psychological research.

View More Free Quizzes
Related BrainMass Solutions

  • Important information about Linear regression and correlation

    I think that the easiest way to answer these questions is to do two regression analyses - one for business accounts and one for residential accounts.

  • Minitab Output for a Multiple Regression Analysis

    Use the data to develop the equation of the regression model to predict insider ownership by debt ratio and divident payout.

  • Regression

    4903 Regression A. Fit a logistic regression model to predict the probability of successful completion of the MBA program based on undergraduate grade point average and GMAT score. b.

  • Statistics Problem Set: U.S. Energy Information

    Compare this model to the model with interaction. 14.10 Given here is Excel output for a multiple regression model that was developed to predict y from two independent variable, x1 and x2. Variable x2 is a dummy variable.

  • Business and Regression Analysis

    Use the regression model to predict the Science score given a Math score is 90. Science Score = 19.48 +0.8136*90 Science Score = 92.704 Provides steps necessary to construct a scatter diagram and regression model.

  • Statistics: Using the Regression Equation

    In this case the regression equation was found by using data with X values ranging from 20 to 50. When we use the model to predict Y, the values of X should be in this same general range.

  • Forecasting Problem: Regression Model

    118740 Forecasting Problem: Regression Model For all exercises indicate the specific values from the model that you are using to draw your conclusions. No credit will be given for just yes or no answers. 1.

  • Develop a regression model to predict the price of two stocks

    The expert develops a regression model to predict the price of two stocks.

  • ANOVA and Regression Analysis Example

    To do this, you would first collect data in 2012 to develop your regression model. Once you have that regression model, you can use it to predict individual scores.

View More Related Solutions