Mandesa, Inc. has current liabilities of $8,700,000, current ratio of 1.9 times, inventory turnover of 11 times, average collection period of 37 days, and credit sales of $64,700,000.
Calculate the value of cash and marketable securities.
Explanation:
1) Current Ratio: Current Assets ÷ Current Liability
= 1.9 = Current Assets ÷$ 8,700,000
= Current Assets = $8,700,000 × 1.9
Current Assets = $ 16,530,000
2) Inventory Turnover: Credit Sales ÷ Inventories
= 11 times = $ 64,700,000 ÷ Inventories
= Inventories = $ 64,700,000 ÷ 11 times
Inventories = $ 5,881,818
3) Average Collection Period: Account Receivable ×365
credit sales
= 37 days = AR × 365 ÷ $ 64,700,000
= Account Receivable = 37 × $ 64,700,000 ÷ 365
= Account Receivable = $ 6,558,630
4) Cash & Marketable Securities :
Current Assets - Inventories - Account Receivable |
5) $ 16,530,000 - $ 5,881,818 - $ 6,558,630
= $ 4,089, 552
Mandesa, Inc. has current liabilities of $8,700,000, current ratio of 1.9 times, inventory turnover of 11...
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