The Probability Distribution of Future Bad Debt Losses for a Given Portfolio of Accounts Receivable (Classic Reprint) - Hardcover

Christoph Haehling Von Lanzenauer

Hardcover

ISBN 10: 0331635453 ISBN 13: 9780331635454

Publisher: Forgotten Books, 2018

Synopsis

Understand how to model future default losses in a portfolio of receivables and move beyond single numbers.

This book presents a method to derive the full probability distribution of bad debt losses, not just a point estimate. It helps you see the stochastic nature of losses and use probabilistic input in accounting and planning.

The work defines the random variable for total uncollectible amounts, explains how to combine defaults across aging categories, and shows how to compute moments such as the mean and higher moments. It also discusses choosing a distribution to represent the losses and using the method of moments to fit parameters from data. A two‑stage approach is proposed: first derive moments, then select a distribution that matches them. Realistic assumptions about independence and defaults are built in, with practical guidance on estimation and validation.

• Learn how the distribution of future bad debt losses is defined and computed from defaults and per‑default losses.
• See how to obtain mean, variance, and higher moment coefficients from portfolio data.
• Explore a two‑stage process to determine f(X): moment estimation followed by distribution fitting.
• Review example methods, including fitting a Gamma or Beta distribution to the loss distribution and checking fit with moment‑based tests.

Ideal for financial professionals, auditors, and students of risk management who want a rigorous, data‑driven approach to valuing doubtful accounts and projecting cash flows from receivables.

Edition details

• Publisher: Forgotten Books
• Publication date: 2018
• Language: English
• ISBN 10: 0331635453
• ISBN 13: 9780331635454
• Binding: Hardcover
• Number of pages: 43