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24. Movin Meals operates several specialty vans that provide

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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)


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

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