Average daily credit sales and average collection period

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Reference no: EM131306475

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 company’s 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

Reference no: EM131306475

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