Mandesa, Inc., has current liabilities of $9,100,000, current ratio of 1.8 times, inventory turnover of 10...

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

Solutions

Expert Solution

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”

jeff jeffy answered 1 year ago

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