The company wants to make improvements in its working capital management. At present, the firm has credit sales of P1,200,000, the collection period is 60 days, and the cost is 80% of the sales price. Compute the (a) Average Accounts Receivale and (b) Average Investment in Accounts Receivable. What can be done to improve Accounts Receivable management?

2013 2012 2011

Assets

Current Assets Cash 30,000 35,000 35,000

Short-Term Investments 20,000 15,000 5,000

Accounts Receivable 20,000 15,000 10,000

Inventory 50,000 45,000 50,000

Total 120,000 110,000 100,000

Non-Current Assets Plant Assets 110,000 97,000 90,000

Accumulated Depreciation (10,000) (7,000) (6,000)

Plant Assets, net 100,000 90,000 84,000

Total Assets 220,000 200,000 184,000

Liabilities

Accounts Payable 55,400 50,000 51,000

Long-Term Debt 80,000 75,000 70,000

Total Liabilities 135,400 125,000 121,000

Stock Holders Equity

Common Stock 45,000 45,000 45,000

Retained Earnings 39,600 30,000 18,000

Total Stockholders' Equity 84,600 75,000 63,000

Total Liabilities & Stockholders' Equity 220,000 200,000 184,000