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

Answer 1

8.96 times ; 40.74 days

Step-by-step explanation:

Given that,

Net Credit sales = $35,497,000

Number of days in the year = 365

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