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.