As loan analyst for Second Bank, you have been presented the following information.

Each of these companies has requested a loan of $200,000 for 6 months with no collateral offered. Inasmuch as your bank has reached its quota for loans of this type, only one of these requests is to be granted.

Instructions
Which of the two companies, as judged by the information given above, would you recommend as the better risk and why? Assume that the ending account balances are representative of the entireyear.

Era Co McCoy Co Assets $ 220,000 108,000 505,000 833,000 230,000 $1,063,000 $150,000 241,000 390,000 781,000 405,000 $1,186,000 Cash Receivables Inventories Total current assets Other assets Total assets Liabilities and Equity Current liabilities Long-term liabilities Capital stock and retained earnings $241,000 200,000 622,000 $1,063,000 $401,000 300,000 485,000 $1,186,000 Total liabilities and equity Annual sales Rate of gross profit on sales $1,300,000 35% $2,300,000 25%