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Mandesa, Inc. has current liabilities of $9,400,000, current ratio of 1.8 times, inventory turnover of 10...

Mandesa, Inc. has current liabilities of $9,400,000, current ratio of 1.8 times, inventory turnover of 10 times, average collection period of 44 days, and credit sales of $65,400,000. Calculate the value of cash and marketable securities. (Use 365 days a year. Do not round your intermediate calculations. Round your final answer to the nearest dollar amount.)

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Answer #1

Current ratio = Current assets / current liabilities

Current Assets = 1.80 * $9,400,000 = $16,920,000

Inventory turnover = 10 times = credit sales / Inventory

Inventory = $65,400,000 / 10 = $6.540,000

Average collection period = 44 days = Accounts receivable * 365 days / $65,400,000

Accounts receivable = $7,883,836

Cash and marketable securities = Current assets - Inventory - Accounts receivable

= $16,920,000 - $6.540,000 - $7,883,836

Cash and marketable securities = $2,496,164

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