bad debt
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2021 ◽  
Vol 2021 ◽  
pp. 1-13
Author(s):  
Fulei Shi ◽  
Bingbing Huang ◽  
Chuanqi Wu ◽  
Liang Jin

At present, the index of gross profit margin is overestimated in China. However, this problem has not attracted enough attention. This paper explores the theoretical limitations of the current revenue that lead to the overestimation of the gross profit margin. Then, we present the concept of revenue to correct the limitations of the current revenue. Moreover, we test the impact on the information content of gross profit margin under revenue caliber. The findings are as follows: (1) The current revenue includes some unrealized items such as in-price tax, so it is not completely consistent with the definition of revenue from the perspective of accounting, which will lead to the overestimation of gross profit margin. Therefore, the current revenue should exclude the in-price tax, bad debt loss, and cash discount in order to obtain the revenue. The gross profit margin based on the revenue can reflect the profitability of the company’s basic business more objectively. (2) The empirical test shows that the gross profit margin based on the revenue has higher information content compared with the gross profit margin based on the current revenue. (3) The current gross profit margin is overestimated by 1.36 percentage points because of the limitations of the current revenue.


The influence of credit management methods on the liquidity and profitability of listed industrial goods firms in Nigeria was investigated in this study. It was decided to use a descriptive survey study design. The sample population for which copies of the questionnaire were distributed was 400 respondents, representing 65% of the population. The participants provided 355 valid responses, which were examined. For descriptive statistics, one-way ANOVA was utilized, and to test the hypotheses, a basic regression analysis method was applied. The results showed that the credit risk assessment, debt recovery strategy, and receivable collection policy sub-variables have a positive and statistically significant impact on the liquidity sub-variables - ability to pay, level of bad debt, and cash inflow. Liquidity had a positive and statistically significant effect on profitability. The study thus, suggest that companies in the industry should enhance their liquidity in order to achieve the targeted profit level by having effective credit terms and proper risk assessment strategy, designing and implementing debt recovery plans to aid collection of the overdue debt, adopting a stringent credit collection method, and employing and retained qualified accountants and credit administrators with excellent knowledge of credit control techniques.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Christine Mitter ◽  
Michaela Walcher ◽  
Stefan Mayr ◽  
Christine Duller

PurposeFamily firms strive for transgenerational survivability. Thus, bankruptcy is a daunting event. Whether family firms fail for other causes than non-family firms has been scarcely researched and is investigated in this study.Design/methodology/approachThe paper draws on a sample of 459 Austrian bankruptcy cases to examine the effects of the distinct characteristics of family firms on failure causes.FindingsOur results indicate that family firm characteristics impact their failure, as bankruptcy causes differ from non-family firms. While family firms fail less often than non-family firms due to unqualified management and poor business-economic competencies, external bankruptcy causes, in particular bad debt and economic slowdown, are more widespread.Practical implicationsAs our findings suggest that the close social bonds of family firms may become a burden in crisis situations and make them especially prone to external bankruptcy causes, owner-managers should pay more attention to the dependencies, deficiencies and risks that come with their binding social ties. Moreover, they should rely on external advice and appropriate management tools to better recognize and fend off the resulting risks.Originality/valueTo the best of our knowledge, this is the first study that quantitatively examines differences in bankruptcy causes between family and non-family firms.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Gerald Mashange ◽  
Brian C. Briggeman

PurposeThe purpose of this paper is to examine the financial condition and ability of farmer cooperatives to withstand significant increases in bad debt expense.Design/methodology/approachA unique data set of farmer cooperative financial statements that spans from 1996 to 2019 is used to examine the changes in profitability, solvency, liquidity and accounts receivable risk. Also, a deterministic stress test model is designed to shock bad debt expense and the resulting write-off of accounts receivable for farmer cooperatives. The stress test provides insights to the resiliency of farmer cooperatives.FindingsResults find that farmer cooperatives are in a strong financial position, which has improved over time. The majority of farmer cooperatives are able to absorb a substantial increase in bad debt expense because of their sizable, retained earnings position. However, cooperatives that have significant profitability challenges do experience much larger losses, especially mixed farmer cooperatives (roughly equally amounts of grain and farm supply sales) and large cooperatives with more than $500 million in sales.Practical implicationsThe stress test results suggest farmer cooperative managers and boards of directors could re-examine their credit policies and consider extending additional credit. Also, cooperatives should consider monitoring and identifying an optimal accounts receivable to retained earnings ratio, which is similar to how banks examine their tier 1 capital ratios.Originality/valueThe value of this study is having data that allows for the examination of the financial condition of farmer cooperatives over time. Also, having current data means the accounts receivable stress test results are more relevant and timelier. This is important because these accounts receivable are primarily tied to crop input supplies, and farmer cooperatives are a significant market participant in the crop input supply market.


Author(s):  
Amanda Beck ◽  
Collin Gilstrap ◽  
Jordan Rippy ◽  
Brian Vansant

AbstractIn this paper, we examine bad debt and charity care reporting by nonprofit hospitals around bond issuance. Given the tax advantages afforded to nonprofit hospitals, including the ability to issue tax-exempt debt, hospital managers encounter stakeholder pressure to provide community benefits. When nonprofits issue debt, they also face economic pressure to meet creditors’ financial performance expectations. We document a reporting strategy that allows nonprofit hospitals to reduce the cost of bond debt while simultaneously alleviating regulators’ and community members’ concerns about inadequate provision of charity care. Using data from public bond issues for California nonprofit hospitals, we find that hospital managers shift costs from bad debt expense to charity care in periods prior to a public bond issuance and that the strategy is associated with a lower cost of debt. Our results inform those relying on accounting measurements to infer nonprofit hospitals’ social good provisions and financial health.


2021 ◽  
pp. 187936652110292
Author(s):  
Elmira Satybaldieva

This article offers a first person account of women’s mobilization against banking and microfinance sectors in Kyrgyzstan. It focuses on the key factors for the evolution of the anti-debt movement, and women’s political strategies to problematize interest and to denaturalize the discourse of financial inclusion. For many years, the financial industry has operated a gendered process of neoliberal capital accumulation under the guise of empowerment that has produced tensions between transnational capital and marginalized women. Building upon Bourdieusian ideas on social movements, the study shows the significance of strain and situational definition in the formation of the anti-debt mobilization. The article uses in-depth interviews with the leaders and activists of the anti-debt movement and borrowers to explore how gender, class and capital were intertwined. It contributes to the literature on post-Soviet politics by challenging the dominant elite-centered frameworks, which are inadequate to explain local movements and gendered activism.


Author(s):  
Yangmei Wang ◽  
Tiankai Wang ◽  
Kirsten Cook

In this study, we examine the effect of health information technology (HIT) investments on hospital bad debt via improved patient experience. Using data from California Hospital Reports and Definitive Healthcare, we first predict and find that HIT investments decrease hospital bad debt. Next, following Baron and Kenny's (1986) approach and the bootstrap approach of Zhao, Kynch, and Chen (2010), we study whether patient experience mediates the relationship between HIT investments and hospital bad debt. We find that HIT improves patient experience which, in turn, reduces bad debt at hospitals. Taken together, our findings provide evidence that patient experience is important as a means to affect the relationship between HIT investments and hospital bad debt.


2021 ◽  
pp. OP.20.01009
Author(s):  
J. Alberto Maldonado ◽  
Shuangshuang Fu ◽  
Ying-Shiuan Chen ◽  
Chiara Acquati ◽  
K. Robin Yabroff ◽  
...  

PURPOSE: Patients with cancer frequently encounter financial hardship, yet systematic strategies to identify at-risk patients are not established in care delivery. We assessed sensitivity of distress-based screening to identify patients with cancer-related financial hardship and associated care delivery outcomes. METHODS: A survey of 225 patients at a large cancer center assessed cancer-related financial hardship (0-10 Likert scale; highest quintile scores ≥ 5 defined severe hardship). Responses were linked to electronic medical records identifying patients’ distress screening scores 6 months presurvey (0-10 scale) and outcomes of missed cancer care visits and bad debt charges (unrecovered patient charges) within 6 months postsurvey. A positive screen for distress was defined as score ≥ 4. We analyzed screening test characteristics for identifying severe financial hardship within 6 months and associations between financial hardship and outcomes using logistic models. RESULTS: Although patients with positive distress screens were more likely to report financial hardship (odds ratio [OR], 1.21; 1.08-1.37; P < .001), a positive distress screen was only 48% sensitive and 70% specific for identifying severe financial hardship. Patients with worse financial hardship scores were more likely to miss oncology care visits within 6 months (for every additional point in financial hardship score from 0 to 10, OR, 1.28; 1.12-1.47; P < .001). Of patients with severe hardship, 72% missed oncology visits versus 35% without severe hardship ( P = .006). Patients with worse hardship were more likely to incur any bad debt charges within 6 months (OR, 1.32; 1.13-1.54; P < .001). CONCLUSION: Systematic financial hardship screening is needed to help mitigate adverse care delivery outcomes. Existing distress-based screening lacks sensitivity.


2021 ◽  
Vol 1 (2) ◽  
pp. 90-113
Author(s):  
Abdellah Ali Ahmed Al-Melahi

Almost all the transactions done by Islamic financial institutions comprise of debts which are measured in local or foreign currencies. This study aims at presenting and discussing opinions of Sh. Shaikh Ali Al- Qaradaghi in issues related to debt arrears settlement as faced by IFIs and prioritizing its usage. The study will discuss the overall principles of debts in general, and about the bad debts in particular. Also, the study discussed standards and Shari’ah pronouncements about debts and arrears settlement issued by organizations and Shari’a boards which focus on issuing pronouncements and standards in the Islamic financial industry. Also, the study discussed opinion of Sh. Ali AlQaradaghi about debts arrears and comparing it with opinions of ijtihād organizations as per the sequence arranged by the researcher. The study found that difference in opinions is existing while dealing with a procrastinating debtor, but for insolvent debtor, so there is no difference of opinion between Shaikh Ali and other except Shariah Standards of Bank Negara Malaysia with no different treatment between a procrastinating and insolvent debtor. The study further arrived at that acceleration of installments and alternatives to bad debts are based on four aspects: acceleration of remaining installments, compensation due to harm of inflation during the arrears, imposing financial penalty, and liquidated damages. This is concerning all the ijtihād bodies. However, Shaikh Ali’s view goes around two aspects: acceleration of remaining installments and compensation due to harm caused by hyperinflation. The study found that there is 71% homogeneity in all the solutions between the opinions of Shaikh Ali and other bodies, and 50% homogeneity for the solution of compensation for harm of inflation. The researcher presented some recommendations, and some of the important ones are working towards unifying the alternatives at least in one country, subsequential treatment of treating bad debt starting from partial acceleration of installments in tandem with the harm of inflation, and finally going for harm of inflation which can be adopted by those who take the view of Shaikh Ali.


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