Selected financial statement data for two years ended December 31 for Carey Co. follow. Assets are reported at their year-end value. $$\begin{array} { l r c }
& \text { Year 2 } & \text { Year 1 } \
\text { Cash } & \$ 32,500 & \$ 30,100 \
\text { Short-term investments } & 9,400 & 10,200 \
\text { Operating expenses } & 72,800 & 70,400 \
\text { Depreciation expense } & 12,000 & 11,200
\end{array}$$
What is the days' cash on hand for each year?

A) Year 2: 251.5; Year 1: 248.5
B) Year 2: 210.1; Year 1: 208.9
C) Year 2: 258.1; Year 1: 265.1
D) Year 2: 215.6; Year 1: 222.9

Question

Selected financial statement data for two years ended December 31 for Carey Co. follow. Assets are reported at their year-end value.   $$\begin{array} { l r c } 
& \text { Year 2 } & \text { Year 1 } \
\text { Cash } & \$ 32,500 & \$ 30,100 \
\text { Short-term investments } & 9,400 & 10,200 \
\text { Operating expenses } & 72,800 & 70,400 \
\text { Depreciation expense } & 12,000 & 11,200
\end{array}$$  
What is the days' cash on hand for each year?
 
A) Year 2: 251.5; Year 1: 248.5
B) Year 2: 210.1; Year 1: 208.9
C) Year 2: 258.1; Year 1: 265.1
D) Year 2: 215.6; Year 1: 222.9

Quizplus · Accepted Answer

Days' cash on hand is calculated by dividing cash and cash equivalents by daily operating expenses (excluding depreciation since it's a non-cash expense). For Year 2, the calculation is $(32500 / (72800 / 365)) = 162.5$ days. For Year 1, it's $(30100 / (70400 / 365)) = 156.5$ days. The provided options do not match these calculations, indicating a possible misunderstanding in the question's setup or an error in the calculation methodology provided in the options.

Selected Financial Statement Data for Two Years Ended December 31