Exercise 24-4 As loan analyst for Teal Bank, you have been presented the following information. Toulouse Co. Lautrec Co. Assets Cash $121,000 $332,000 Receivables 216,000 301,000 Inventories 577,000 514,000 Total current assets 914,000 1,147,000 Other assets 503,000 600,000 Total assets $1,417,000 $1,747,000 Liabilities and Stockholders’ Equity Current liabilities $307,000 $346,000 Long-term liabilities 407,000 503,000 Capital stock and retained earnings 703,000 898,000 Total liabilities and stockholders’ equity $1,417,000 $1,747,000 Annual sales $925,000 $1,561,000 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

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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Exercise 24-4

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

	Toulouse Co.		Lautrec Co.
Assets
Cash	$121,000			$332,000
Receivables	216,000			301,000
Inventories	577,000			514,000
Total current assets	914,000			1,147,000
Other assets	503,000			600,000
Total assets	$1,417,000			$1,747,000

Liabilities and Stockholders’ Equity
Current liabilities	$307,000			$346,000
Long-term liabilities	407,000			503,000
Capital stock and retained earnings	703,000			898,000
Total liabilities and stockholders’ equity	$1,417,000			$1,747,000
Annual sales	$925,000			$1,561,000
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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