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13 May, 16:24

Suppose the following information was taken from the 2017 financial statements of FedEx Corporation, a major global transportation/delivery company. (in millions)

2017 2016

Accounts receivable (gross) $3,773 $4,675

Accounts receivable (net) 3,638 4,358

Allowance for doubtful accounts 135 317

Sales revenue 33,080 41,218

Total current assets 7,196 7,502

Required:

Calculate the accounts receivable turnover and the average collection period for 2017 for FedEx Corporation.

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  1. 13 May, 16:46
    0
    8.27 times and 44.13 days

    Explanation:

    The computations are shown below:

    As we know that

    Account receivable turnover ratio = Net credit sales : Average accounts receivable

    where,

    Net credit sales is $33,080

    And, the Average accounts receivable would be

    = (Accounts receivable, beginning of year + Accounts receivable, end of year) : 2

    = ($3,638 + $4,358) : 2

    = $3,998

    So, the accounts receivable turnover ratio would be

    = $33,080 : $3,998

    = 8.27 times

    And the average collection period is

    = 365 days : accounts receivable turnover

    = 365 days : 8.27 times

    = 44.13 days
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