As loan analyst for Buffalo Bank, you have been presented the following information.
Question:
As loan analyst for Buffalo Bank, you have been presented the following information.
Toulouse Co. Lautrec Co.
Assets
Cash $114,000 $333,000
Receivables 225,000 311,000
Inventories 553,000 496,000
Total current assets 892,000 1,140,000
Other assets 484,000 601,000
Total assets $1,376,000 $1,741,000
Liabilities and Stockholders' Equity
Current liabilities $316,000 $365,000
Long-term liabilities 405,000 484,000
Capital stock and retained earnings655,000 892,000
Total liabilities and stockholders' equity$1,376,000 $1,741,000
Annual sales $901,000 $1,490,000
Rate of gross profit on sales 30% 40%
Each of these companies has requested a loan of $50,000 for 6 months with no collateral offered. Because your bank has reached its quota for loans of this type, only one of these requests is to be granted.
How do you find the ratios for current, acid test, accts receivable, inventory turnover and cash to current liabilities?
Intermediate Accounting
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield