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?

Answer rating: 100% (QA)

Here are the steps to calculate the key ratios for each company Current Ratio Current ... View the full answer