Toulouse Co. Lautrec Co. Assets $ 120,000 220,000 570,000 $ 320,000 302,000 Cash Receivables Inventories 518,000 Total current assets 910,000 500,000 1,140,000 Other assets 612,000 Total assets $1,410,000 $1,752,000 Liabilities and Stockholders' Equity $ 305,000 400,000 705,000 $ 350,000 500,000 Current liabilities Long-term liabilities Capital stock and retained earnings Total liabilities and stockholders' equity 902,000 $1,410,000 $1,752,000 Annual sales $ 930,000 $1,500,000 Rate of gross profit on sales 30% 40%
Toulouse Co. Lautrec Co. Assets $ 120,000 220,000 570,000 $ 320,000 302,000 Cash Receivables Inventories 518,000 Total current assets 910,000 500,000 1,140,000 Other assets 612,000 Total assets $1,410,000 $1,752,000 Liabilities and Stockholders' Equity $ 305,000 400,000 705,000 $ 350,000 500,000 Current liabilities Long-term liabilities Capital stock and retained earnings Total liabilities and stockholders' equity 902,000 $1,410,000 $1,752,000 Annual sales $ 930,000 $1,500,000 Rate of gross profit on sales 30% 40%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
(Ratio Computation and Analysis; Liquidity) As loan analyst for Utrillo Bank, you have been presented the following information.
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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.
Instructions
Which of the two companies, as judged by the information given above, would you recommend as the better risk and why? Assume that the ending account balances are representative of the entire year.
Transcribed Image Text:Toulouse Co.
Lautrec Co.
Assets
$ 120,000
220,000
570,000
$ 320,000
302,000
Cash
Receivables
Inventories
518,000
Total current assets
910,000
500,000
1,140,000
Other assets
612,000
Total assets
$1,410,000
$1,752,000
Liabilities and Stockholders' Equity
$ 305,000
400,000
705,000
$ 350,000
500,000
Current liabilities
Long-term liabilities
Capital stock and retained earnings
Total liabilities and stockholders' equity
902,000
$1,410,000
$1,752,000
Annual sales
$ 930,000
$1,500,000
Rate of gross profit on sales
30%
40%
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