
Statistics in Practice 87
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STATISTICS in PRACTICE
Founded in 1997, Small Fry Design is a toy and acces-
sory company that designs and imports products for in-
fants. The company’s product line includes teddy bears,
mobiles, musical toys, rattles, and security blankets and
features high-quality soft toy designs with an emphasis
on color, texture, and sound. The products are designed
in the United States and manufactured in China.
Small Fry Design uses independent representatives
to sell the products to infant furnishing retailers, chil-
dren’s accessory and apparel stores, gift shops, upscale
department stores, and major catalog companies. Cur-
rently, Small Fry Design products are distributed in more
than 1000 retail outlets throughout the United States.
Cash flow management is one of the most critical ac-
tivities in the day-to-day operation of this company. En-
suring sufficient incoming cash to meet both current and
ongoing debt obligations can mean the difference between
business success and failure. Acritical factor in cash flow
management is the analysis and control of accounts re-
ceivable. By measuring the average age and dollar value
of outstanding invoices, management can predict cash
availability and monitor changes in the status of accounts
receivable. The company set the following goals: the av-
erage age for outstanding invoices should not exceed 45
days, and the dollar value of invoices more than 60 days
old should not exceed 5% of the dollar value of all ac-
counts receivable.
In a recent summary of accounts receivable status,
the following descriptive statistics were provided for the
age of outstanding invoices:
Mean 40 days
Median 35 days
Mode 31 days
Interpretation of these statistics shows that the mean or
average age of an invoice is 40 days. The median shows
that half of the invoices remain outstanding 35 days or
more. The mode of 31 days, the most frequent invoice
age, indicates that the most common length of time an in-
voice is outstanding is 31 days. The statistical summary
also showed that only 3% of the dollar value of all ac-
counts receivable was more than 60 days old. Based on
the statistical information, management was satisfied
that accounts receivable and incoming cash flow were
under control.
In this chapter, you will learn how to compute and
interpret some of the statistical measures used by Small
Fry Design. In addition to the mean, median, and mode,
you will learn about other descriptive statistics such as
the range, variance, standard deviation, percentiles, and
correlation. These numerical measures will assist in the
understanding and interpretation of data.
Small Fry Design uses descriptive statistics to
monitor its accounts receivable and incoming
cash flow.
SMALL FRY DESIGN*
SANTA ANA, CALIFORNIA
STATISTICS in PRACTICE
*The authors are indebted to John A. McCarthy, President of Small Fry
Design, for providing this Statistics in Practice.
In Chapter 2 we discussed tabular and graphical presentations used to summarize data. In
this chapter, we present several numerical measures that provide additional alternatives for
summarizing data.
We start by developing numerical summary measures for data sets consisting of a sin-
gle variable. When a data set contains more than one variable, the same numerical measures
can be computed separately for each variable. However, in the two-variable case, we will
also develop measures of the relationship between the variables.
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