Gentry-De La Garza Model

Categories: Metrics, Trading, Econ

Named after college profs James Gentry and Jesus De La Garza, the Gentry-De La Garza Model (such a memorable name) is a method for analyzing accounts receivables (which is basically how much money a client owes a business for goods and services already delivered).

While it’s preferable that accounts receivables is pretty consistent (like how you’d prefer your utility bills)...sometimes, it’s not. The Gentry-De La Garza Model gives three different explanations for why the bottom line might be higher than before, called “sales pattern effects” (more sales), “collection experience effects” (money isn’t being collected as well as before), and the “joint effect” (the former two things, in some combination).

This model tries to cut through the confusion, giving accountants a clearer picture and limited options for figuring out what the **** happened with accounts receivables this time.

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