Assume your recommendations have now resulted in Xtreme Toys being able to reduce their cash gap by 20 days.

Calculate the amount of additional cash that Xtreme Toys will now have on hand and the savings on the annual cost of financing the cash gap at 8%.

 

	Assets			Liabilities and Equity
	Cash and Marketable Securities	$ 880,000		Accounts Payable	$ 750,000
	Accounts Receivable	2,075,000		Other Current Liabilities	1,950,000
	Inventories	2,100,000		Total Current Liabilities	$ 2,700,000
	Other Current Assets	300,000
	Total Current Assets	$ 5,355,000		Long Term Debt	1,700,000
	Plant and Equipment	3,700,000		Common Stock	300,000
	Other Assets	700,000		Retained Earnings	5,055,000
				Total Stockholder's Equity	$ 5,355,000
	Total Assets	$ 9,755,000		Total Liabilities + Equity	$ 9,755,000
	Income Statement
	Net Sales	$ 12,000,000		.
	Cost of Sales	6,700,000
	Selling, General and Admin Expenses	2,450,000
	Other Expenses	550,000
	Total Expenses	$ 9,700,000
	Earnings before taxes	2,300,000
	Taxes	825,000
	Net Income after Taxes	$ 1,475,000

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Assets Liabilities and Equity Cash and Marketable Securities S 880,000 Accounts Payable Accounts Receivable Inventories Other Current Assets Total Current Assets S 750,000 1,950,000 2,700,000 2,075,000 Other Current Liabilities 2,100,000 Total Current Liabiities 300,000 S 5,355,000 Long Term Debt 1,700,000 Plant and quipment Other Assets 3,700,000 Common Stock 300,000 5,055,000 5.355.000 9,755,000 700,000 Retained Earnings Total Stockholder's Equity Total Assets S9,755,000 Total Liabilities +Equity