Computing and Interpreting the Receivables Turnover Ratio – A recent annual report for Dell, Inc., contained the following data:

(dollars in thousands)

Current Year

Previous Year

Accounts receivable

$4,843,000

$6,064,000

Less: Allowance for doubtful accounts

112,000

103,000

Net accounts receivable

$4,731,000

$5,961,000

Net sales (assume all on credit)

$61,101,000

Required:

1. Determine the receivables turnover ratio and average days sales in receivables for the current year.

2. Explain the meaning of each number.