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 receivables

Problem 2: Drake Paper Company sells on terms of "net 30". The firm's variable cost ratio is 0.80. a. If annual credit sales are $20 million and its accounts receivable average is 15 days overdue, what is Drake's investment in receivables? b. Suppose that, as the result of a recession, annual credit sales decline by 10 percent to $18 million, and customers delay their payments to an average of 25 days past the due date. What will be Drake's new level of receivables investment?

Problem 3: Explain the importance of inventory management. Name and explain two inventory systems.