Publication Date


Document Type


First Advisor

Nelson, J. H. (Professor of business)||Thistlethwaite, Robert L.

Degree Name

M.S. (Master of Science)

Legacy Department

College of Business


Credit--Management; Debtor and creditor


Problem: The purpose of this study was to analyze certain characteristics of customers classified as bad and doubtful accounts receivable by a national food and allied lines manufacturer/wholesaler. This investigation sought to discover relationships between poor credit experience as evidenced by classification of debtors' accounts as bad and doubtful and several factors. Financial factors considered were: net worths of debtor firms; dollar amounts of bad debts; composite credit appraisal ratings assigned by Dun and Bradstreet, Inc; cumulative sales; and annual sales of debtors. Non-financial factors considered were: seasonal variations; ages of debtors; types of businesses conducted by debtors; and length of patronage with subject creditor. Procedure: The manufacturer/wholesaler maintains extensive credit files, particularly on accounts which have exhibited unsatisfactory performance. The files on 518 such customers, all classified as bad and doubtful accounts receivable during the six year period studied, were consulted. Data obtained were presented in tabular form to facilitate their handling and the formulation of conclusions. Conclusions: Financial stability appeared closely related to firm size as denoted by net worth. The great majority of bad debts were small in amount, illustrating the tendency toward more satisfactory experience with larger debtors. Mercantile agency ratings wrere shown to be effective indicators of credit experience. The chance for good performance increased as cumulative sales made to a debtor by the subject creditor within the year previous to classification as bad and doubtful increased. Similarly, size of debtors' annual sales was directly related to favorable experience. Seasonal factors held little importance except in the area of freeze-dry products. The highest degree of risk with regard to ages'of debtor firms was found among the young. Service organizations, both retail and wholesale, accounted for the greatest losses. Manufacturing companies performed best from that standpoint. Satisfactory business relationships were closely linked with length of patronage by debtors with the subject creditor.


Includes bibliographical references.


viii, 58 pages




Northern Illinois University

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