Suppose you work in the loan department of Superior Bank. Dean Young, owner of Dean
Young Beauty Aids, has come to you seeking a loan for $500,000 to expand operations. Young proposes to use accounts receivable as collateral for the loan and has provided you with the following information from the company€™s most recent financial statements:

Requirement
1. Analyze the trends of sales, day€™s sales in receivables, and cash collections from customers for 2011 and 2010. Would you make the loan to Young? Support your decision with facts andfigures.

Transcribed Image Text:

2011 2010 2009 (In thousands) Sales $1,475 $1,001 $902 647605 297 287 253 876 599 518 81 Gross proft 354 Other e Net profit or (loss) before taxes.S Accounts receivable 67 $44 S 128 107 94 13