In: Finance
Mandesa, Inc., has current liabilities of $9,100,000, current ratio of 1.8 times, inventory turnover of 10 times, average collection period of 30 days, and credit sales of $63,999,999. |
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 |
$ |
Step-1, Calculation of total current assets
Current Ratio = Total Current assets / Total current liabilities
1.80 Times = Total current assets / $9,100,000
Total current assets = $9,100,000 x 1.80 Times
Total current assets = $16,380,000
Step-2, Calculation of Inventory value
Inventory turnover ratio = Sales / Inventory
10 Times = $63,999,999 / Inventory
Inventory = $63,999,999 / 10 Times
Inventory = $6,400,000
Step-3, Calculation of accounts receivables
Accounts receivables = Total credit sales x [Average collection period / 365 Days]
= $63,999,999 x [30 Days / $365 Days]
= $5,260,274
Step-4, Calculation of Cash and marketable securities
Total current assets = Cash and marketable securities + Inventory + Accounts receivables
$16,380,000 = Cash and marketable securities + $6,400,000 + $5,260,274
Cash and marketable securities = $16,380,000 - $6,400,000 - $5,260,274
Cash and marketable securities = $4,719,726
“Hence, the value of cash and marketable securities will be $4,719,726”