Final answer:
The value of inventory listed on Burt's TVs balance sheet can be calculated by identifying the total current assets and then subtracting the values of both cash and accounts receivable. The inventory value is found to be $7.89264 million.
Step-by-step explanation:
The question revolves around calculating the value of inventory on a firm's balance sheet using provided financial data. Burt's TVs has current liabilities of $25.2 million, and the current ratio is 0.87 times. Given that cash constitutes 42% and accounts receivable constitutes 22% of current assets, the focus is to determine the balance attributed to inventory.
Firstly, we need to find the total current assets. The current ratio is computed as current assets divided by current liabilities. Therefore, current assets equal the current ratio multiplied by current liabilities:
Current Assets = Current Ratio × Current Liabilities
Current Assets = 0.87 × 25.2 million = $21.924 million
Next, we calculate the values for cash and accounts receivable, which are expressed as percentages of current assets:
Cash = 42% of Current Assets = 0.42 × 21.924 million = $9.20808 million
Accounts Receivable = 22% of Current Assets = 0.22 × 21.924 million = $4.82328 million
The value of inventory can be found by subtracting cash and accounts receivable from the total current assets:
Inventory = Current Assets – (Cash + Accounts Receivable)
Inventory = 21.924 million – (9.20808 million + 4.82328 million) = $7.89264 million
Therefore, the value of inventory listed on Burt's TVs balance sheet is $7.89264 million.