Firm A had no credit losses last year, but 1% of Firm Bs accounts rece

QUESTION

Firm A had no credit losses last year, but 1% of Firm Bs accounts receivable proved to be uncollectible and resulted in losses. Should Firm B fire its credit manager and hire As?
No, the Company should not take decision just on the basis of above information available. This is because it should do analysis of whether the hiring of manager is feasible or not. Firm B should consider below facts before taking any decision: 1) Salary paid to Manager of Firm A and salary paid to Manager of Firm B. 2) Due to manager of Firm B skills they might be making more sales in comparison to manager of firm A. Firm must see the profit on increased sales and loss due to credit¦

. Since if the profit is more than loss then Manager of firm B is doing better. 3) Sales that will be impacted if manager of firm B is fired. Some managers arekey personnel and have goodwill. So if he is fired then sales of firm B will be impacted. These are some of the factors which should be considered before taking any decision

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