Final answer:
To calculate days' cash on hand for Newton Company for 20Y8 and 20Y9, sum cash and short-term investments for each year's cash equivalents, subtract depreciation from operating expenses for cash operating expenses, and use the formula (Cash and cash equivalents / Cash operating expenses) × 365 days, rounding the result to one decimal place.
Step-by-step explanation:
The days' cash on hand is a financial metric used to determine how many days a company can operate with its available cash. To calculate the days' cash on hand for Newton Company for the years 20Y8 and 20Y9, we need to sum up cash and short-term investments to find the cash and cash equivalents at the end of each year. Then, we subtract the depreciation expense from the operating expenses to find the cash operating expenses. Finally, we divide this number by 365 days and multiply by the cash and cash equivalents to get the days' cash on hand.
- For 20Y8:
Cash and cash equivalents end of year = Cash + Short-term investments = $24,250 + $9,460 - Cash operating expenses for 20Y8 = Operating expenses - Depreciation expense = $63,780 - $11,400
- Days' cash on hand for 20Y8 = (Cash and cash equivalents / Cash operating expenses) × 365 days
- For 20Y9:
Cash and cash equivalents end of year = Cash + Short-term investments = $25,500 + $8,270 - Cash operating expenses for 20Y9 = Operating expenses - Depreciation expense = $60,135 - $13,225
- Days' cash on hand for 20Y9 = (Cash and cash equivalents / Cash operating expenses) × 365 days
The final step is to perform the calculations to get the days' cash on hand for each year, which should be rounded to one decimal place as per the student's instructions.