As loan analyst for Martinez 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 enter the ratio rounded to 2 decimal places : 1 enter the ratio rounded to 2 decimal places : 1 Acid-test ratio enter the ratio rounded to 2 decimal places : 1 enter the ratio rounded to 2 decimal places : 1 Accounts receivable turnover enter the accounts receivable turnover rounded to 2 decimal places times enter the accounts receivable turnover rounded to 2 decimal places times Inventory turnover enter the inventory turnover rounded to 2 decimal places times enter the inventory turnover rounded to 2 decimal places times Cash to current liabilities enter the ratio rounded to 2 decimal places : 1 enter the ratio rounded to 2 decimal places

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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As loan analyst for Martinez Bank, you have been presented the following information.

Assets
	Toulouse Co.		Lautrec Co.
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	enter the ratio rounded to 2 decimal places	: 1		enter the ratio rounded to 2 decimal places	: 1
Acid-test ratio	enter the ratio rounded to 2 decimal places	: 1		enter the ratio rounded to 2 decimal places	: 1
Accounts receivable turnover	enter the accounts receivable turnover rounded to 2 decimal places	times		enter the accounts receivable turnover rounded to 2 decimal places	times
Inventory turnover	enter the inventory turnover rounded to 2 decimal places	times		enter the inventory turnover rounded to 2 decimal places	times
Cash to current liabilities	enter the ratio rounded to 2 decimal places	: 1		enter the ratio rounded to 2 decimal places	: 1

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