Computing and Interpreting the Receivables Turnover Ratio
A recent annual report for FedEx containing the following data:
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(Dollars in thousands)
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Current Year
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Previous Year
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Accounts receivable
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$3,178,000
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$2,776,000
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Less: Allowance for doubtful accounts
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151,000
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149,000
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Net Accounts Receivable
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$3,027,000
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$2,627,000
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Net Sales (assume all on credit)
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$24,710,000
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Required:
1) Determine the accounts receivable turnover ratio and average day's sales in receivables for the current year.
2) Explain the meaning of each number