Fundamental Analysis of Receivables and Predicting Future Earnings

The purpose of this paper is identifying factors that influence changes in accounts receivable and bad debt reserves. Although this paper estimates the relation between changes in the accounts receivable-to-sales ratio and the bad debt reserve-to-receivables ratio and changes in future earnings. The data used to test the hypotheses is primarily taken from the Tehran Stock Exchange database over the years 2001- 2009 and the relation between the factors examined in several sets of cross- sectional regressions. The results show that there is a positive relation between the number of years that firms exhibit and/ or anticipate losses and investment in receivables. Furthermore، the results indicate that the firm''s age، size and growth in sale are positively related with the ratio of accounts receivable-to-sales.