Question

In: Finance

Saunders Corp. has a book net worth of $11,150. Long-term debt is $2,300. Net working capital,...

Saunders Corp. has a book net worth of $11,150. Long-term debt is $2,300. Net working capital, other than cash, is $2,950. Fixed assets are $2,750 and current liabilities are $1,500.

  

Required:
(a) How much cash does the company have?

  (Click to select)   9,250   10,700   8,400   9,528   8,972

  

(b) What is the value of the current assets?

  (Click to select)   13,015   4,450   14,385   13,426   13,700

Solutions

Expert Solution

Compute the total liabilities, using the equation as shown below:

Total liabilities = Net worth + Long-term liabilities + Current liabilities

                         = $11,150 + $2,300 + $1,500

                         = $14,950

Hence, the total liabilities is $14,950.

Compute the current assets other than cash, using the equation as shown below:

Current assets = Net working capital + Current liabilities

                        = $2,950 + $1,500

                        = $4,450

Hence, the current assets other than cash is $4,450.

Compute the total current assets, using the equation as shown below:

Total current assets = Total liabilities – Fixed assets

                                = $14,950 - $2,750

                                = $12,200

Hence, the total current assets are $12,200.

(a)

Compute the cash balance, using the equation as shown below:

Cash = Total current assets – Current assets other than cash

         = $12,200 - $4,450

         = $7,750

Hence, the cash balance is $7,750.

(b)

Compute the total current assets, using the equation as shown below:

Total current assets = Total liabilities – Fixed assets

                                = $14,950 - $2,750

                                = $12,200

Hence, the total current assets are $12,200.


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