As loan analyst for Waterway Bank, you have been presented the following information. Toulouse Co. Lautrec Co. Assets Cash $114,000 $328,000 Receivables 230,000 296,000 Inventories 582,000 493,000 Total current assets 926,000 1,117,000 Other assets 493,000 607,000 Total assets $1,419,000 $1,724,000 Liabilities and Stockholders' Equity. Current liabilities $314,000 $340,000 Long-term liabilities 385,000 493,000 Capital stock and retained earnings 720,000 891,000 Total liabilities and stockholders' equity $1419,000 $1,724,000 Annual sales $911,000 $1,440,000 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.

As loan analyst for Waterway Bank, you have been presented the following information. Toulouse Co. Lautrec Co. Assets Cash $114,000 $328,000 Receivables 230,000 296,000 Inventories 582,000 493,000 Total current assets 926,000 1,117,000 Other assets 493,000 607,000 Total assets $1,419,000 $1,724,000 Liabilities and Stockholders' Equity. Current liabilities $314,000 $340,000 Long-term liabilities 385,000 493,000 Capital stock and retained earnings 720,000 891,000 Total liabilities and stockholders' equity $1419,000 $1,724,000 Annual sales $911,000 $1,440,000 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.

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter18: Acquiring Capital For Growth And Development

Section18.1: Short-term Debt Financing

Problem 1WT

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Question

As loan analyst for Waterway Bank, you have been presented the following information.
Toulouse Co.
Lautrec Co.
Assets
Cash
$114,000
$328,000
Receivables
230,000
296,000
Inventories
582,000
493,000
Total current assets
926,000
1,117,000
Other assets
493,000
607,000
Total assets
$1,419,000
$1,724,000
Liabilities and Stockholders' Equity
Current liabilities
$314,000
$340,000
Long-term liabilities
385,000
493,000
Capital stock and retained earnings
720,000
891,000
Total liabilities and stockholders' equity
$1,419,000
$1,724,000
Annual sales
$911,000
$1,440,000
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.
Compute the various ratios for each company. (Round answer to 2 decimal places, e.g. 2.25.)
Toulouse Co.
Lautrec Co.
Current ratio
:1
:1
Acid-test ratio
:1
:1
Accounts receivable turnover
times
times
Inventory turnover
times
times
Cash to current liabilities
:1
:1

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