Note: When converting annual data to daily data or vice versa in these problems, assume there are 365 days per year.

Problem 1

Miranda Tool Company sells to retail hardware stores on credit terms of net 30. Annual credit sales are $18 million and are spread evenly throughout the year. The companys variable cost ratio is 0.70, and its accounts receivable average $1.9 million. Using this information, determine the following for the company:

a.Average daily credit sales

b.Average collection period

c.Average investment in receivable