Green Products, Inc. has current liabilities = $40 million, current ratio = 2.4 times, inventory turnover ratio = 8 times, average collection period = 40 days, and sales = $320 million. What is the value of their cash and marketable securities?

Question

Quizplus · Accepted Answer

Current assets = Current liabilities * Current ratio = $40 million * 2.4 times = $96 million.Cash and marketable securities = Current assets - Inventory - Accounts receivable = $96 million - ($320 million / 8 times) - ($320 million / 365 days * 40 days) = $20.93 million.