Rockway Framers Ltd. has requested a bank loan for a one-year period to refinance most of its notes payable. It would be supported by Rockway's current assets. The following statements and industry averages accompanied the loan request. Prepare a statement of changes in financial position as at December 31, 2015, for Rockway, and complete a ratio analysis. Also prepare pro forma statements for 2016 on the basis of the same financial relationships as in 2015, no new capital asset purchases, and a sales increase of 25 percent. Recommend support or rejection of the loan request.

Industry Averages
Profit margin ............ . . . .............. .............. . . .3.50%
Return on assets................................................4.00%
Return on equity ........ .... .. .. .. . . . . . . . ... .......8.20%
Gross margin ........... . .. ..................................38.00%
Receivables turnover ....... . .. .. .. .. .... . ... ........9.73 times
Average coll ection period.................................37.51 days
Inventory turnover ....... ... . .. . . .. . . . ... . .. . ......2.50 times
Capital asset turnover..........................................2.08 times
Total asset turnover ...... . .. .. .. .. . ... . . . .. . ......1.14 times
Current ratio ...... . .. ..... .. .. .. .. . ........ . .............1.80
Quick ratio .......... . ..... ........................................0.70
Debt to total assets. . ... . .. ... . .. ...... . . . . ........58.00%
Times interest earned ..... .. .. .. .. .. . . . . . . . . .....3.80 times

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ROCKWAY FRAMERS LTD. Balance Sheets December 31 2015 2014 Current assets: $ 1,300 $ 20,000 Cash Accounts receivable.. 36,000 28,000 101,000 64,500 Inventories.... 112,500 Total current assets.. 138,300 Land....... 57,700 44,500 Buildings and equipment... Less: Accumulated amortization.. Total assets.... 222,000 155,000 85,000 $333,000 $250,000 62,000 Current liabilities: $ 48,770 $ 23,250 Accounts payable... Notes payable... 104,500 37,750 153,270 61,000 Total current liabilities. Long-term debt . 51,000 64,000 Common stock 70,000 70,000 Retained earnings.. 58,730 $333,000 $250,000 55,000 Total liabilities and equity... ROCKWAY FRAMERS LTD, Income Statements Year ended Dec. 31, 2015 2014 Sales .... $355,200 $277,500 Cost of goods sold .... Contribution margin ...... 213,120 166,500 142,080 111,000 Sales and administration expenses. 82,140 74,370 Amortization.. ... 23,000 10,000 Operating income.. Interest .... 36,940 26,630 14,200 6,800 Earnings before taxes 22,740 19,830 5,685 $ 17,055 $ 14,872 Taxes... 4,958 Net income.