Question

What is The Importance Of Analyzing Accounts Receivable.

Answer 1

Accounts Receivable-

These are the accounts which arises due to occurance of credit sale.These accounts are recoverable on future dates.

The basic concept of accounts receivables arise due to cash unavailablity.When businesses do not have cash then they tend to purchase there needs from credit sources.This concept comes with Accounts receivable for the seller and Accounts Paybale for the the buyer.

Analaysis of Accounts Receivables-

The accounts receivables are the cash to be received in future.Based on recovery of these Accounts Receivables,the businesses plan their purchases and other contracts.

Since the recovery from accounts becames essential for the businesses to survive,hence analysis of accounts receivables becomes must.

The analysis of these accounts will tell the feasibility of realisation of these accounts and time in which these accounts can be realised.

Accordingly all the businesses will incorporate the Accounts Receivables realisations before planning for the upcoming Businesses finances.

Accounts receivable is important to analyse the liquidity position of businesses.On the basis of these accounts receivables several finances option from lenders becomes available.

How to analyse the Accounts Receivables-

In order to analyse the Accounts Receivables, one must evaluate the current economic status of Accounts.We must know in advance whether these accounts receivables are realised or notnin near future.Based on the analysis adequate provisions must be create in order to cope with any emergency future cash insufficiency.

Thats it,

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