Quick answer of this accounting questions Sunshine Catering has annual sales of $425,000. Theircost of goods sold is 52% of sales, and the profit marginis 6%. If the average accounts receivable balance is$56,000, how long does it take Sunshine Catering tocollect paymentforitsservices?

Step 1: Definition of Average Collection Period (ACP)The Average Collection Period (ACP) measures…

Answered: Sunshine Catering has annual sales of…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 11P

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An FI has estimated the following annual costs for its demand deposits: management cost per account = $150, average account size = $1600, average number of cheques processed per account per month = 75, cost of clearing a cheque = $0.10, fees charged to customer per cheque = $0.05, and average fee charged per customer per month = $15. (a) What is the implicit interest cost of demand deposits for the FI? (b) If the FI has to keep an average of 8 per cent of demand deposits as required reserves with the RBA paying no interest, what is the implicit interest cost of demand deposits for the FI? (c) What should be the per-cheque fee charged to customers to reduce the implicit interest costs to 3 per cent? Ignore the reserve requirements.
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Sunshine Catering has annual sales of $425,000. Their cost of goods sold is 52% of sales, and the profit margin is 6%. If the average accounts receivable balance is $56,000, how long does it take Sunshine Catering to collect payment for its services?