Burt's TVs Has Current Liabilities of $25 Million

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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