A recent annual report for FedEx contained the following data: (dollars in thous

Question

A recent annual report for FedEx contained the following data: (dollars in thousands) Current Year Previous Year $ 3,727,000 4,527,000 Accounts receivable 191,000 Less: Allowance for doubtful accounts Net accounts receivable Net sales (assume all on credit) 141,000 $ 3,536,000 $ 4,386,000 $35,497,000 Required: 1. Determine the receivable turnover ratio and average days sales in receivables for the current year. (Use 365 days a year. Enter your answers in thousands not in dollars. Ratio values should be rounded to 2 decimal places.) Receivables Turnover Ratio Numerator times Denominator Average Days Sales in Receivables Numerator days Denominator

Explanation / Answer

Receivables Turnover Ratio = Net Credit sales / Average Accounts receivable = $35,497,000 / [($3,536,000 + $4,386,000) / 2] = 8.96 times

Average Day Sales in Receivables = Number of days in the year / Accounts receivable turnover ratio = 365 / 8.96 = 40.74 days

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