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Question

Learr AssignmentMain.do?invoker-&itakeAssignmentSessionLocator; assignment-take&inprogress; false Calculator Click to watch the Tell Me More Learning Objective ADM video and then answer the questions below. 1. Days' cash on hand is computed as divided by- Print Item a. cash and short-term investments; daily cash operating expenses b. daily cash operating expenses ash and cash equivalents c. cash and cash equivalents; daily cash operating expenses d. daily cash operating expenses; cash and short-term investments 2. Financial data for a company are provided below: Cash (end of year) Short-term investments (end of year) Operating expenses Depreciation expense $500,000 400,000 750,000 100,000 What is the company's days cash on hand? a. 243.33 b. 280.77 c. 438 d. 505.39

Explanation / Answer

Solution: 1. Answer is a. cash and short term investments; daily cash operating expenses. Working Notes: Days' cash on hand = (cash + short term investments ) / ((operating expenses - non cash expenses(depreciation))/365 ) Which is equal to Days' cash on hand = (cash and short term investments ) / daily cash operating expenses. 2. Answer is d. 505.39 Working Notes: Days' cash on hand = (cash + short term investments ) / ((operating expenses - non cash expenses(depreciation))/365 ) =(500,000+400,000)/(750,000 - 100,000)/365 =900,000/1780.82 =505.3852 =505.39 Please feel free to ask if anything about above solution in comment section of the question.

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