#6.docx - 1 Total Current Liabilities = Accounts Payable Notes Payable = $25M $30M = $55M 2 Total Current Assets = Total Current Liabilities x Current

#6.docx - 1 Total Current Liabilities = Accounts Payable...

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1. Total Current Liabilities = Accounts Payable + Notes Payable = $25M + $30M = $55M 2. Total Current Assets = Total Current Liabilities x Current Ratio = $55M x 1.4 = $77M 3. Cash = Total Current Liabilities x Cash Ratio = $55M x 0.20 = $11M 4. Cash and Account Receivable = Total Current Liabilities x Quick Ratio = $55M x 1.0 = $55M 5. Account Receivable = Cash and Account Receivable – Cash = $55M - $11M = $44M 6. Inventories = Total Current Assets – Account Receivable – Cash = $77M - $44M - $11M = $22M 7. Total Assets = Total Liabilities and Shareholder’s Equity = $115M 8. New Property Plant and Equipment = Total Assets – Total Current Assets = $115M - $77M = $38M 9. Cost of Goods Sold = Inventory Turnover x Average Inventory
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