Computing and Interpreting t he Receivables Turnover Ratio
A recent annual report for Dell, Inc., contained the following data:
(dollars in thousands) | ||
| Current Year | Previous Yea r |
Accounts receivable | $ 4,843 ,000 | $6 ,064 ,000 |
Less: Allowance for doubtful account | 112,000 | 103,000 |
Net accounts receivable | $ 4,731,000 | $5,961,000 |
Net sales (assume all on credit) | $6 1,101,000 |
|
Required:
1. Determine the receivables turnover ratio and average days sales in receivables for the current year.
2. Explain the meaning of each number.
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