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RUDIKE [14]
3 years ago
5

Return to questionItem 6Item 6 E8-16 Analyzing and Interpreting Receivables Turnover Ratio and Days to Collect [LO 8-4] FedEx Co

rporation reported the following rounded amounts (in millions): 2016 2015 Accounts Receivable $ 7,430 $ 5,905 Allowance for Doubtful Accounts (180 ) (185 ) Accounts Receivable, Net of Allowance $ 7,250 $ 5,720 Net Sales (assume all on credit) $ 50,370 $ 47,450 Required: Determine the receivables turnover ratio and days to collect for 2016. (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 1 decimal place.)
Business
1 answer:
madreJ [45]3 years ago
4 0

<u>Solution and Explanation:</u>

The following formulas will be used in order to calculate the accounts receivable turnover ratio and in order to find out the number of days collect.

Accounts receivable turnover ratio = Net sales divided by Average net Accounts receivable

=\$ 50,370 /[(\$ 7,250+\$ 5,720) / 2]

=\$ 50,370 / \$ 6,485

= 7.77 times

<u>Days to collect</u> = 365 divided by Accounts receivable turnover ratio

= $365  divided by 7.77

= 47 days

<u>Note</u>: The number of days that has been assumed is 365 days

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