GROUP 7
IMPACT OF ACCOUNTS
RECEIVABLE ON THE
PROFIT AND DAILY
OPERATION OF AVON
ACCOUNTING RESEARCH
PRESENTORS:
Layug, Layne Shannen M.
Manalaotao, Fatima P.
Manuel, Princess P.
Plaza, Nerish M.
Reyes, Iesha Riezl B
ACCOUNTING RESEARCH
INTRODUCTION
INTRODUCTION
As most of business organizations, nowadays, offer credit facilities
to their customers, it is very useful to know the difference between
credit sales and accounts receivables. Businesses allow them to pay for
the goods and services that they purchase at a later date (within a
specifically given/agreed period) after the purchase is being made. This
process is known as credit sales. As a result of selling goods on a credit
basis, accounts receivables (trade debtors) exist. Accounts receivable is
the total amount that the customers are owed to pay for the
organization.
INTRODUCTION
In Bataan, a problem about the collection of the accounts receivable is also
faced by the AVON company. AVON is a direct seller, which means that
their sales representatives sell the product in a non-retailing setting. They
have a variety of products in different categories, such as beauty, which
includes make-up, lotion, deodorant, perfume, and the like, as well as
Beauty Plus, which includes underwear, and home, which consists of
household items. These products are available through both cash sales and
credit sales, but credit sales are preferred by the majority of the
customers. Through the information that the researchers have gathered
they wanted to know the impact of accounts receivable on the profit and
daily operation of Avon.
ACCOUNTING RESEARCH
STATEMENT
OF THE
PROBLEM
STATEMENT OF THE PROBLEM
EF
EN IT
The general purpose of this study is to know the impact of accounts
receivable rate on the profit and daily operation of Avon. Specifically, it
will seek to answer the following questions:
1. How may the accounts receivable of the business be described in
terms of:
1.1 collection,
B
1.2 credit sales and
1.3 credit policy
2. How may the collections of the accounts receivable be described in
terms of:
2.1 aging of accounts and
2.2 efficiency
S
STATEMENT OF THE PROBLEM
3. How may the accounts receivable affect the business in
term of:
3.1 sales,
3.2 profitability,
3.3 liquidity and
3.4 budget planning
4. Is there a significant relationship between the Accounts
Receivable and the profit of the business?
5. Is there a significant relationship between the Accounts
Receivable and the business’ daily operation?
ACCOUNTING RESEARCH
METHODOLOGY
METHODS AND TECHNIQUES OF THE STUDY
In this study, the researchers will employ the descriptivecorrelational research method. It is the preferred strategy since
the researchers are more concerned with defining the
relationship between the variables than with discovering a
coincidental relationship. The purpose of a survey is to collect
data that is relevant to the current study. It will determine and
the relationship between and among the various factors that are
relevant to the study.
POPULATION AND SAMPLING OF THE STUDY
The respondents of this study are the employees and dealers
(resellers) of AVON in Tenejero, Balanga City, Bataan. Using
Random Sampling, a total population of 35 employees and 150
dealers of AVON, Tenejero, Balanga, and a marginal error of 5%,
the researchers came up with a total of 40 respondents consisting
of 7 employees and 33 dealers of AVON.
INSTRUMENTS OF THE STUDY
The major source of data for this study will be a survey
questionnaire. This instrument will be used only after a
detailed consultation and verification of its validity. The
survey questionnaire will only have one part. This includes
questions that will be formulated based on the questions
stated on the statement of the problem of this study in order
to help the researchers to determine if the collection
efficiency rate affects the profit and daily operation of AVON
in Tenejero.
ACCOUNTING RESEARCH
SUMMARY
AND
FINDINGS
SUMMARY AND FINDINGS
Based on the data that the researchers have collected it shows that the
average collection of AVON every week is Php 0 – Php 20,000, Php 0 –
Php 50,000 every month and Php 0 – Php 1,000,000 every year, in
which they can always collect 50% and 100% of it, with a mean of 4.70
and 4.525. When considering the due dates of their accounts receivable
it shows that they always made collections before due date with a mean
of 4.50 and that they can also collect up to 50% and 90% of their
receivables halfway to their due date and it also shows that the
respondents seldom collect 10% of their receivables and they seldom
have no collection in a week.
SUMMARY AND FINDINGS
When it comes to the age of accounts it shows that whatever age the account
is they can collect Php 0 – Php 50,000 of their receivable and when it comes
to its collectability percentage it is collectible for 31% - 60% in whatever age
the account receivable is. Although when the accounts age is 60-90 days old
it is considered as stale but the results shows that the respondent can still
collect their receivable at this age which shows a good impression although
it is a bit late. It can be concluded that the reason why they have this
collectability percentage is because of the good credit policy that they have
since the data shows that they always make follow for those customers who
are not yet paid with a mean of 4.75 and that they seldom encounter
customers who pay after the due date with a mean of 1.75.
SUMMARY AND FINDINGS
It is concluded that the accounts receivable of the business has a good
impact to the sales of the business since based on the data that the
researchers have gathered it shows that most of the sales of the
business is from the credit sales. It also shows that they can meet
their sales quota weekly, monthly and yearly with the help of their
credit sales. While the impact of the accounts receivable to the profit
of the business is also good since the data shows that with mean of
4..525 they always have a stable profit because of their high credit
sales. It also shows that the accounts receivable always had a positive
impact on the profit of the business with amean of 4.825.
SUMMARY AND FINDINGS
When it comes to the liquidity of the business it shows that the
accounts receivable has a good impact in their expenses with a mean
of 4.25 they often collect easily that they can pay their liabilities. In
addition to that information we can also conclude that the credit sales
of the business are not a hindrance in paying their bills since they can
easily collect their accounts receivable.
SUMMARY AND FINDINGS
In analyzing the data it shows that there is a
significant connection between the accounts
receivable, profit and daily operation of the business
and that they do have a positive relationship that
when the other variable increases the other one will
also increase and vice
versa. In which this shows that the null hypothesis is
rejected.
ACCOUNTING RESEARCH
RECOMMENDATION
RECOMMENDATION
From the findings of this research, the following
recommendations are made: the business should keep their
collection policy since it shows a good impact in the business
and if they wanted it to be more efficient and effective, they
should make a development when it comes to their credit
policy. The business should also keep or intensify their effort
in managing their accounts receivables since the data shows
that it is not a hindrance when it comes to their liability.
RECOMMENDATION
Since the study shows a positive relationship of the
accounts receivable on the profit and daily operation
of the business, business owners and decision maker
should not be complacent with it. They should not
neglect the fact that it happens because of the good
handling of the business with their accounts
receivable. They should monitor, review and adjust
their credit policy so that the effect of their accounts
receivable on the profit and daily operation of the
business become stable.
RECOMMENDATION
For the future researchers who is going to
use this study as their reference, they
should consider the fact that there are
limitations when it comes to the data given.
So, it is better to understand each and every
variable that is needed to see every angle of
the problem.
ACCOUNTING RESEARCH
THANK YOU !
PRESENTORS:
Layug, Layne Shannen M.
Manalaotao, Fatima P.
Manuel, Princess P.
Plaza, Nerish M.
Reyes, Iesha Riezl B