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 34 days, and credit sales of $64,400,000.

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.)

Answer 1

Current Ratio = Current Assets / Current Liabilities
1.90 = Current Assets / $8,400,000
Current Assets = $15,960,000

Inventory Turnover = Credit Sales / Inventory
11 = $64,400,000 / Inventory
Inventory = $5,854,545

Average Collection Period = 365 * Accounts Receivable / Credit Sales
34 = 365 * Accounts Receivable / $64,400,000
Accounts Receivable = $5,998,904

Current Assets = Cash and Marketable Securities + Accounts Receivable + Inventory
$15,960,000 = Cash and Marketable Securities + $5,998,904 + $5,854,545
Cash and Marketable Securities = $4,106,551