Question

Suppose the following information was taken from the 2014 financial statements of FedEx Corporation, a major global transportation / delivery company.
2014 2014
Accounts receivable (gross) $3,697 $4,835
Accounts receivable (net) 3,460 4,187
Allowance for doubtful accounts 237 648
Sales revenue 37,368 39,579
Total current assets 7,254 7,691

Answer each of the following questions.

a. Calculate the accounts receivable turnover and the average collection period for 2014 for FedEx.
b. Is accounts receivable a material component of the company?

Answer 1

Answer:

yes

Explanation:

Answer 2

Answer:

A/R    TO 9.77

Days on Inventory 37

YES As it weight as almost half of the current assets of the company

Explanation:

The financial statement post the current year first and the last year in the secodn column therefore, the second colum is the year 2013 and my calculation will be based on that.

2014 2013

Accounts receivable (gross) $3,697 $4,835

Accounts receivable (net) 3,460 4,187

Allowance for doubtful accounts 237 648

Sales revenue 37,368 39,579

Total current assets 7,254 7,69

$\frac{Sales}{Average A/R} = A/RTurnover$

​where:

$Average A/R=(Beginning A/R+ Ending A/R)/2$

Sales 37,368

beginning 4,187

ending 3,460

$Average A/R=4,187 + 3,460)/2$

Avg. A/R   3823.5

$\frac{37368}{3823.5} = Inventory Turnover$

A/R    TO 9.77324441

$\frac{365}{Inventory TO} = Avgerage Collection period$

$\frac{365}{9.77324440957238} = Avgerage Collection period$

Days on Inventory 37

3,460 / 7,254 = 0.4769