Computing and Interpreting the Receivables Turnover Ratio - A recent annual report for FedEx contained the following data:
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(dollars in thousands)
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Current Year
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Previous Year
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Accounts receivable
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$3,587,000
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$4,517,000
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Less: Allowance for doubtful accounts
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196,000
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158,000
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Net accounts receivable
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$3,391,000
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$4,359,000
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Net sales (assume all on credit)
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$35,497,000
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Required:
1. Determine the receivables turnover ratio and average days sales in receivables for the current year.
2. Explain the meaning of each number.