Discuss the advantages and disadvantages of the methods to estimate Research Paper

Discuss the advantages and disadvantages of the methods to estimate uncollectible receivables - Research Paper Example However, the disadvantage of such method is that it does not consider customers and their past trend for paying off their debts. It may be possible that in previous years, 20% of the receivable would have been uncollectible because customers were not trustworthy. However, this assumption may not be correct for the current year customers. In such a case, the percentage should also be revised accordingly. Another demerit of this method is that it applies to all of the company’s sales, which may include cash transactions also. It must be noted that uncollectible amounts are only against receivables (Barry, Ralph and Steven). It requires time to calculate uncollectible receivables by this method as bifurcation between cash and credit sales is difficult especially when the volume of transaction is high (Barry, Ralph and Steven). In this method, the collectibles are first analyzed as per their period. Such receivables may be classified as 15 days past due, 30 days past due, etc. Estimates are then made for debts beyond one year or other such criteria (Belverd and Marian). This aging helps to ascertain the will and financial health of the customer for paying off the debt. Another advantage of such aging method is that it helps to prioritize the efforts of recovery for individual debts based on the due days. More aged items are given more priority for recovery (Belverd and Marian). Disadvantage of such method is that it estimates those receivables to be uncollectible which may be received after certain time. It may be possible that the customer was willing to pay the amount, but he was unable to do that due to any reason such as liquidity crisis. Subsequently, customer may pay that amount which was expensed out as bad debt (Belverd and Marian). In this method, different classes of aging are applied different percentages for estimating the bad debts. For example, by applying 10%, 20% and 50% to 6 months, 9 months and 12 months old

Poor management Essay Example | Topics and Well Written Essays - 1750 words

Poor management - Essay Example The company opened a famous research centre, the Xerox Palo Alto Research Centre or Xerox PARC. Until the end of 1970, Xerox dominated the market with am amazing monopoly. Its market share was 90% and this led to a confidence about it surviving new competition in the market. By the 1980's Xerox's market share declined from 90 percent to 43 % due to the competition from Ricoh, Sharp, Cannon, Kodak and IBM. Facing a downturn in office-equipment outlays, tougher rivals, an accounting scandal, and management turnover, Xerox saw sales drop drastically. By the year 2000, Xerox's share price had fallen below $4, from a high of $64 a year earlier. In year 2001, Xerox experienced a net loss of $293 million. That was down 1% from the year before and 20% off its peak of $19.4 billion in 1998. The rapid change of the technology sector makes most of the technological companies suffer. This is a common phenomenon in technological companies were the buzz phrase is "The technology is obsolete by the time you hear about it"! With a rapidly evolving technological market, complacency is the first causative factor for decline. The office equipment industry is a technology driven industry. The fast development of hardware and software as well as mass consumption often brings down the prices rapidly. There has been increasing cost pressures and price competitions in this industry. Xerox being in the office equipment industry is susceptible to a lot external environmental factors as well. With the globalization, bringing the world closer together and opening up the arena to more acquisitions and mergers companies have now more dynamic product lines brought upon by consolidation of the companies. The ever-changing global economy brings both opportunities and threats. Deregulation of the trade economies and lowering import barrier for goods offer more incentive to more players. Xerox was also affected by the economic uncertainties and the recession of early 90's and early 2000's. These contributed to lesser capital spending which influenced its overall profitability. The uncertainty in the economy created significant challenges in driving revenue growth, especially in the technology sector where customers were delaying capital spending. Failure to move into digital age products Xerox, which was using the digital interface in its research center failed to see that it was the heartbeat of the future. It was one of the great fumbles of all time. In the 1970s, Xerox Corp.'s Palo Alto Research Center (PARC) developed the technologies that would drive the personal computer revolution. ''By 1979, we had it all--graphical user interfaces, mice, windows and pull-down menus, laser printing, distributed computing, and Ethernet,'' recalls M. Frank Squires, a PARC founder in 1970 and now chief administrative officer of Sematech Inc., the chip-industry consortium in Austin, Tex. Xerox had the PC and networking businesses firmly hooked--but didn't try to reel them in. It did not even patent PARC's innovations. Management was too preoccupied with aggressive competition from Japan in its core copier business, says CEO Paul A. Allaire. ''If we had been good, we could have done both. We probably should have,'' he admits. Instead, PARC's technologies became the foundations for such icons as Apple Computer Inc. and 3Com Corp. Apple co-founder Steven P. Jobs visited