Question

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)		$ 3,704		$ 4,562
Accounts receivable (net)		3,263		4,069
Allowance for doubtful accounts		441		493
Sales revenue		37,499		35,432
Total current assets		7,754		7,016

Answer each of the following questions.

Calculate the accounts receivable turnover and the average collection period for 2017 for FedEx Corporation. (Round answers to 1 decimal place, e.g. 12.5. Use 365 days for calculation.)

Accounts receivable turnover			times
The average collection period for 2017			days

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List of Accounts

Is accounts receivable a material component of the company’s total current assets? Choose your answer here                                                                      YesNo

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List of Accounts

Answer 1

Accounts receivable turnover = Sales revenue/Average Accounts receivable (net)
Accounts receivable turnover	10.2	times	=37499/((3263+4069)/2)
The average collection period for 2017	35.8 or 35.7	days	=365/10.2
2
% of Accounts Receivable to Current Assets	42%		=3263/7754
Accounts receivable are a signification portion of Total current assets
Yes, accounts receivable is a material component of the company’s total current assets