You are the credit manager for Carmichael Supply Company. One of your sales staff has made a $50,000 credit sale to Zizes Electronics, a manufacturer of small computers. Your responsibility is to decide whether to approve the sale. You have the following data for the computer industry and Zizes:

The salesperson believes that Zizes would order about $200,000 per year of materials that would provide a gross margin of $35,000 to Carmichael if reasonable credit terms could be arranged.

Required:
State whether or not you would grant authorization for Zizes to purchase on credit and support your decision.

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For the Years 2007-2011 Industry 13.4% 10.8% 14.4% 10.3% 0.32 4.04 2.53 3.95 Zizes Electronics Average annual sales growth Average annual operating income growth Average annual net income growth Average annual asset growth Average debt-to-equity ratio Average current ratio Average inventory turnover ratio Average accounts receivable turnover ratio 17.6% 9.7% 99% 14.2% 0.26 3.71 2.06 4.18 For Zizes, you have the following data for the year ended December 31, 2011 Sales revenue Net income Total assets Current ratio Debl-to-equity ratio Inventory turnover ratio Accounts receivable turnover ratio $3,908,000 $359,000 $3,626,000 1.82 0.37 1.79 3.62