Exercise 8-14 (in millions) 2017 2016 $ 3,368 $ 4,683 3,242 4,392 126 291 36,395

Question

Exercise 8-14

(in millions)

2017

2016

$ 3,368

$ 4,683

3,242

4,392

126

291

36,395

39,677

6,407

7,070

Exercise 8-14

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)

$ 3,368

$ 4,683

Accounts receivable (net)

3,242

4,392

Allowance for doubtful accounts

126

291

Sales revenue

36,395

39,677

Total current assets

6,407

7,070

Answer each of the following questions.

Explanation / Answer

Accounts receivable turnover = Credit Sales / Average Accounts Receivable

= $ 36,395 / [( 3242 +4392) /2]

= 9.534975111

= 9.5

Hence the correct answer is 9.5 times

The average collection period for 2017 = 365 Days / Accounts receivable turnover

= 365 / 9.534975111

= 38.3

Hence the correct answer is 38.3 Days

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