Posted: December 27th, 2016

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.

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 company’s variable cost ratio is 0.70, and its accounts receivable averageaccounts 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 receivables

Assume there are 365 days per year.