Chloe's Closet

Chloe Mendez owns a clothing company. Chloe's Closet. She has a team of tailors who work for 8 hours
every day from Monday to Saturday. Demand for her business is strong but there seems to be
something preventing her from meeting the demands of her customers.

Chloe sells to both big departmant stores and small boutique stores under the brand Chloe's Closet.
Some brands also ask her to manufacture their own designs. Business for Chloe has been good since it
started last 2014. In fact despite the tough competition fom cheaper manufacturers abroad, she still
manages to grow her customer base.

On December 4, 2015 Chloe recieved a billing statement from a raw material suppler for an amount of
PHP400,000 which will be due in 5 days. She is also scheduled to pay her employees' monthly salary of
PHP70,000 the following day. Upon checking her bank account, she ony has a PHP67,000 balance. She
knew she exceeded her saless target last October and November so she is wandering why she only has
this amount of cash in her bank account. Was her money stolen? Being a CPA, she checked the bank
statemert and her financial records and found no mistakes

Here is the latest financial statement of Chloe's Closet as of November 30, 2015:
What's wrong with Chloe's Closet?
GUIDE QUESTIONS FOR THE CASE STUDY:

1. What was AR turnover between 2014 to 2015? Check the efficiency of AR management.
2. What was Inventory turnover between 2014 to 2015? Check the Inventory management.
3. What was the payable turnover for Chloe's Closet? How did affect the problem?
4. What factors lead to the low cash balance of Chloe's Closet?
5. Highlight important recommendations/changes that must be done to the operations pf Chloe's
Closet.