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Refining Measures to Improve Performance Measurement of the Accounts Receivable Collection Function

By Philip Leitch, Dawne Lamminmaki

Accounts receivable management is an important facet of financial management. The average collection period and aging schedule are two widely used gauges of accounts receivable collection performance. These performance measures are deficient, however, especially when used for internal evaluation, as a change in the average collection period or the composition of an aged schedule does not necessarily relate to a change in collection efficiency. This study proposes refinements to these metrics.   In the case of the ageing schedule, it is proposed that accounts receivable values should be related to their original credit sales. To calculate the average collection period, it is proposed that the balance of accounts receivable should be divided into age categories and these categories should be matched to the credit sales that generated them. The manner in which these revised measures constitute more accurate internal indicators of accounts receivable performance is outlined and empirically examined.

An Examination of Budgetary Roles in the Context of Sponsorship Management: A Contingency Perspective

By Deborah Delaney, Chris Guilding

This study examines budgetary roles in the context of sponsorship management and identifies factors affecting the importance of budgetary roles in the sponsorship investment decision-making context. This has been pursued through the analysis of qualitative field data as well as a survey of Australian organisations with active sponsorship agendas.

It was found that authorisation of sponsorship expenditure is the main sponsorship management budgetary role. It was also found that planning, forecasting and motivation are relatively important sponsorship management budgetary roles. Trust and risk were identified as significant factors affecting the importance of budgetary roles in this context. These findings give credence to Sidhu and Roberts (2008) call for further research of the marketing/accounting interface as it appears the relative importance of budgetary roles in a sponsorship management context differs to the relative importance of budgetary roles that have been reported in the literature.

Product Diversification: The Need for Innovation and the Role of a Balanced Scorecard

By Nazmi Saeb Jarrar and Malcolm Smith

This paper tests the benefit of contemporary approaches to performance measurement systems represented by the Balanced Scorecard (BSC) to diversified organisations. Product diversification relationships, embracing both innovation and performance, were examined in a structural equation model, where the BSC is treated as an endogenous variable. We find product diversification to be significantly associated with the use of the BSC. The BSC is shown in turn to significantly associate with organisational innovation, the use of management initiatives of total quality management (TQM) and just in time (JIT) and performance.


A New Framework for Capacity Costing and Inventory Variance Analysis

By Massood Yahya-Zadeh

The proposed framework in this article presents a new framework for capacity costing and inventory variance analysis by introducing linear programming (LP) into variance analysis to allow for optimal budgeting in a firm with two production departments and two products. In addition, the proposed framework replaces the traditional concept of ex ante flexible budget, with the concept of ex post flexible budget, which allows management to optimally revise the budget in response to changes in market and operational conditions. Additionally, an inventory variable is added to the linear programming model to capture management’s planned and actual inventory decisions.

The proposed framework further distinguishes between practical and budgeted capacity in each department and explicitly identifies the planned and unplanned changes in inventory levels and in capacity utilization. Collectively, these modifications to traditional flexible budgeting and variance analysis enhance their managerial and pedagogical applications.

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