An analyst's manager at a local investment firm had been reading through a recent report regarding MGM Resorts International when he noticed a drop in the company’s bad debt expense estimate for 2016. He had asked an analyst at the firm to investigate. The manager knew a decrease like this could indicate an improvement in collectability from customers, but he also knew the expense was subject to estimates from management. He needed to know whether to interpret the decline as a good sign or not.
This case is intended for use in an introductory financial accounting course to demonstrate the impact of accounts receivable on financial statements.