If the borrower just used the reverse mortgage proceeds to pay off the original mortgage, after ten years the reverse mortgage balance, including fees and interests, would be around $135,000. If on the other hand, you want to establish a line of credit or receive monthly income from the reverse mortgage, then you will want to have as much equity available as possible. For example, take the 65-year-old with the $300,000 home.
The average accounts receivable collection period can be calculated from the following equation: Period=DaysReceivablesTurnover{\displaystyle Period={\frac {Days}{ReceivablesTurnover}}}. In the equation, days refers to the number of days in the period being measures (usually a year or half of a year).
Calculate the likely amount of bad debts on the Account Receivable Aging Report by multiply the total receivables in the 0 to 30, 31 to 60, 61 to 90, and 90+ day time buckets by historical bad debt rates for each category. Use the greater of the figures derived in steps two and three as the bad debt reserve to be used.