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# 24. Movin Meals operates several specialty vans that provide

24. Movin Meals operates several specialty vans that provide hot food and beverages to workers at various construction sites. The company has annual sales of \$81,600. Cost of goods sold average 63 percent of sales and the profit margin is 4.8 percent. The average accounts receivable balance is \$6,200. Calculate the Movin Meals’ average collection period. (Please calculate the arithmetic solution and show your work)

Given:

Annual Sales = \$81,600

COGS = 63% of sales = \$81,600*63% = \$51,408

Profit margin = 4.8%

Average account receivable balance = \$6,200

Average Collection Period = (Average Account receivable balance * 365)/Credit sales

Assuming all sales are credit sales, we have:

Average Collection Period= (\$6,200*365)/ \$81,600 = 27.73 days