Mandesa, Inc., has current liabilities of $8,400,000, current ratio of 1.9 times

Question

Mandesa, Inc., has current liabilities of $8,400,000, current ratio of 1.9 times, inventory turnover of 11 times, average collection period of 30 days, and credit sales of $64,000,004.

Calculate the value of cash and marketable securities. (Use 365 days a year. Round your intermediate calculations and final answer to the nearest dollar amount.)

Mandesa, Inc., has current liabilities of $8,400,000, current ratio of 1.9 times, inventory turnover of 11 times, average collection period of 30 days, and credit sales of $64,000,004.

Explanation / Answer

Current assets = 1.90×$8,400,000 = $15,960,000

Inventory = $64,000,000/11 = $5,818,182

Accounts receivable = 30×$64,000,000/365 = $5,260,274

Cash and marketable securities:

= $15,960,000- $5,818,182-$5,260,274

= $4,881,544

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