The 2010 financial statements for Thor and Gunnar Companies are summarized here:

These two companies are in the same business and state but different cities. One-half of Thor's sales and one-quarter of Gunnar's sales are on credit. Each company has been in operation for about 10 years. Both companies received an unqualified audit opinion on the financial statements. Thor Company wants to borrow \(\$ 105,000\), and Gunnar Company is asking for \(\$ 36,000\). The loans will be for a two-year period. Neither company issued stock in 2010.
Required:
1. Calculate the ratios in Exhibit 13.5 for which sufficient information is available. Round all calculations to two decimal places.
2. Assume that you work in the loan department of a local bank. You have been asked to analyze the situation and recommend which loan is preferable. Based on the data given, your analysis prepared in requirement 1, and any other information, give your choice and the supporting explanation.

Data from Exhibit 13.5

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Profitability Ratios (1) Net Profit Margin (Ch. 5, p. 226) Net Income Net Sales Revenue x 100 (2) Gross Profit Percentage = Net Sales Revenue - Cost of Goods Sold (Ch. 6, p. 275) Net Sales Revenue Fiscal 2008 $2,195 x100 4.6% $48,230 $16,501 x 100 x 100 = 34.2% $48,230 $48,230 = 1.52 ($32,686 + $30,869)/2 $48,230 ($22,722 + $21,361)/2 = 2.19 $2,195 ($18,055 + $16,098)/2 x 100 = 12.9% $2,195 = $1.51 1,454 $4,122 = 1.88 $2,195 $18.25 = 12.1 $1.51 (3) Asset Tumover (Ch. 5, p. 226) Net Sales Revenue Average Total Assets Net Sales Revenue (4) Fixed Asset Tumover = (Ch. 9, p. 420) Average Net Fixed Assets Net Income (5) Return on Equity (ROE) = x100 (Ch. 11, p. 522) Average Stockholders' Equity Net Income (6) Earnings per Share (EPS) = (Ch. 11, p. 522) Average Number of Common Shares Outstanding (7) Quality of Income = Net Cash from Operations (Ch. 12, p. 569) (8) Price/Eamings Ratio (Ch. 11, p. 522) Net Income Stock Price - EPS