Mandesa, Inc., has current liabilities of $9,800,000, current ratio of 2.0 times

Question

Mandesa, Inc., has current liabilities of $9,800,000, current ratio of 2.0 times, inventory turnover of 12 times, average collection period of 30 days, and credit sales of $63,999,992.

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 $9,800,000, current ratio of 2.0 times, inventory turnover of 12 times, average collection period of 30 days, and credit sales of $63,999,992.

Explanation / Answer

Days of receivables = 365 / receivables turnover

30 = 365 / receivables turnover

receivables turnover = 12.17

Receivables turnover = credit sales / receivables

12.17 = 63,999,992 / receivables

receivables = 5,258,832.539

inventory turnover = Sales / inventory

12 = 63,999,992 / inventory

inventory = 5,333,332.667

Current assets = Current ratio * current liability

Current assets = 2 * 9,800,000

Current assets = 19,600,000

Cash and marketable securities = 19,600,000 - 5,333,332.667 -  5,258,832.539

Cash and marketable securities = $9,007,834.79

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