Question

Bookmarks Window Help Fri 8.48 P 1063 Ch Breuired HW View Policies Current Attempt in Progress Suppose the following information was taken from the 2022financial statements of FedEx Corporation, a major global transportation delivery company, in millions) Accounts receivable (gros) Accounts receivable (net) 2022 2021 $3.740 $4.610 3.400 4350 Allowance for doubtful accounts Sales revenue 340 260 33,325 35,825 7.170 7.292 Total current assets Answer each of the following questions Calculate the accounts receivable turnover and the average collection period for 2022 for FedEx. Round answers to decimal p 12.5. Use 365 days for calculation.) .. Accounts receivable turnover The average collection period for 2022 days e Textbook and Media

Answer 1

Accounts receivable turnover ratio = Net credit sales / Average accounts receivable

Average accounts receivable = [ Opening accounts receivable (net) + Closing accounts receivable (net) ] / 2 = [ $3,400 + $4,350 ] / 2 = $3,875

Accounts receivable turnover ratio = $33,325 / $3,875 = 8.6 times.

Average collection period = 365 days / Accounts receivable turnover ratio = 365 days / 8.6 times = 42.44 days or 42 days.

Is accounts receivable a material component of the company's total current assets ?

Accounts receivable to total current assets = Accounts receivable / Total currents assets = $3,400 / $7,170 = 0.47

As accounts receivable accounts for almost 47 % of the total current assets, which makes it a material component of the company's total current assets.