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Roman55 [17]
3 years ago
15

Mandesa, Inc., has current liabilities of $8 million, current ratio of 2 times, inventory turnover of 12 times, average collecti

on period of 30 days, and credit sales of $64 million.
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.)



Cash and marketable securities $
Business
1 answer:
Brut [27]3 years ago
5 0

Answer:

The answer is: Cash and marketable securities $5,406,393

Explanation:

We have:

+ Current ratio = Current asset / Current liabilities = 2; with Current liabilities is given at $8 million => Current asset is $16 million;

+ Current asset = Inventory + Account Receivable + Cash and marketable securities <=> Cash and marketable securities = $16 million - Inventory - Account Receivable ( as current asset is calculated above at $16 million)

+ Average collection period = Account Receivable/ Credit Sales x 365 <=> Account Receivable = Average collection period/365 x Credit sales = 30/365 x 64 million = $5,260,274

+ Inventory turnover = Sales / Inventory <=> Inventory = Sales/ Inventory turnover = 64 million / 12 = $5,333,333

=> Cash and marketable securities = 16,000,000 - 5,333,333 - 5,260,274 = $5,406,393.

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