FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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As loan analyst for Headland Bank, you have been presented the following information.
Assets
Cash
Receivables
Inventories
Total current assets
Other assets
Total assets
Liabilities and Stockholders' Equity.
Current liabilities
Long-term liabilities
Capital stock and retained earnings
Total liabilities and stockholders' equity
Annual sales
Rate of gross profit on sales
Toulouse Co.
$122,000
225,000
564,000
911,000
502,000
$1,413,000
$299,000
398,000
716,000
$1,413,000
$964,000
30 %
Lautrec Co.
$332,000
313,000
541,000
1,186,000
638,000
$1,824,000
$353,000
502,000
969,000
$1,824,000
$1,548,000
40 %
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Transcribed Image Text:As loan analyst for Headland Bank, you have been presented the following information. Assets Cash Receivables Inventories Total current assets Other assets Total assets Liabilities and Stockholders' Equity. Current liabilities Long-term liabilities Capital stock and retained earnings Total liabilities and stockholders' equity Annual sales Rate of gross profit on sales Toulouse Co. $122,000 225,000 564,000 911,000 502,000 $1,413,000 $299,000 398,000 716,000 $1,413,000 $964,000 30 % Lautrec Co. $332,000 313,000 541,000 1,186,000 638,000 $1,824,000 $353,000 502,000 969,000 $1,824,000 $1,548,000 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.
(a1) Compute the various ratios for each company. Assume that the ending account balances are representative of the entire year. (Round answer to 2 decimal places, e.g. 2.25.)
Current ratio
Acid-test ratio
Accounts receivable turnover
Inventory turnover
Cash to current liabilities
Toulouse Co.
:1
:1
times
times
:1
Lautrec Co.
:1
:1
times
times
:1
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Transcribed Image Text: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. (a1) Compute the various ratios for each company. Assume that the ending account balances are representative of the entire year. (Round answer to 2 decimal places, e.g. 2.25.) Current ratio Acid-test ratio Accounts receivable turnover Inventory turnover Cash to current liabilities Toulouse Co. :1 :1 times times :1 Lautrec Co. :1 :1 times times :1
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