Burt's TVs Has Current Liabilities of $25 Million

question 81

Multiple Choice

Burt's TVs has current liabilities of $25 million. Cash makes up 40 percent of the current assets and accounts receivable makes up another 20 percent of current assets. Burt's current ratio = 0.85 times. What is the value of inventory listed on the firm's balance sheet?

• A)$4.25m.
• B)$8.5m.
• C)$10m.
• D)$40m.Current ratio = 0.85 = Current assets/$25m => Current assets = 0.85 * $25m = $21.25m.Cash = 0.40 * $21.25m = $8.5m.Accounts receivable = 0.20 * $21.25m = $4.25m.

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Definitions:

Wildfires

Uncontrolled and often widespread fires in areas of combustible vegetation, often exacerbated by dry conditions and strong winds.

Unexpected Detours

Situations or incidents that cause one to deviate from a planned or expected route or course of action.

Liable

Legally responsible for something, especially in the context of financial or legal obligations.

Bailment

The transfer of possession and control of personal property to another with the intent that the same property will be returned later.