Computing and Interpreting the Receivables Turnover Ratio – A recent annual report for FedEx contained the following data:
|
(dollars in thousands) |
||
|
Current Year |
Previous Year |
|
|
Accounts receivable |
$3,587,000 |
$4,517,000 |
|
Less: Allowance for doubtful accounts |
196,000 |
158,000 |
|
Net accounts receivable |
$3,391,000 |
$4,359,000 |
|
Net sales (assume all on credit) |
$35,497,000 |
|
Required:
1. Determine the receivables turnover ratio and average days sales in receivables for the current year.
2. Explain the meaning of each number.