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Crowley Building Supply sells various building materials to retail outlets. The company has just approached Sycamore State Bank requesting a $300,000 loan to strengthen the Cash account and to pay certain pressing short-term obligations. The companys financial statements for the most recent two years follow:

Crowley Building Supply
Comparative Balance Sheets
	This Year		Last Year
Assets
Current assets:
Cash	$	59,000	$	144,000
Marketable securities		4,000		22,000
Accounts receivable, net		481,000		293,000
Inventory		951,160		591,080
Prepaid expenses		22,000		29,000
Total current assets		1,517,160		1,079,080
Plant and equipment, net		1,646,620		1,551,580
Total assets	$	3,163,780	$	2,630,660
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities	$	811,000	$	450,000
Bonds payable, 8%		619,000		619,000
Total liabilities		1,430,000		1,069,000
Stockholders' equity:
Preferred stock, $25 par, 7%		323,000		323,000
Common stock, $10 par		515,000		515,000
Retained earnings		895,780		723,660
Total stockholders' equity		1,733,780		1,561,660
Total liabilities and stockholders' Equity	$	3,163,780	$	2,630,660

Crowley Building Supply
Comparative Income Statement and Reconciliation
	This Year		Last Year
Sales	$	5,031,000	$	4,373,000
Cost of goods sold		3,877,200		3,441,200
Gross margin		1,153,800		931,800
Selling and administrative expenses		653,800		534,800
Net operating income		500,000		397,000
Interest expense		49,520		49,520
Net income before taxes		450,480		347,480
Income taxes (35%)		157,668		121,618
Net income		292,812		225,862
Dividends paid:
Preferred dividends		22,610		22,610
Common dividends		98,082		62,592
Total dividends paid		120,692		85,202
Net income retained		172,120		140,660
Retained earnings, beginning of year		723,660		583,000
Retained earnings, end of year	$	895,780	$	723,660

During the past year, the company has expanded the number of lines that it carries in order to stimulate sales and increase profits. It has also moved aggressively to acquire new customers. Sales terms are 2/10, n/30. All sales are on account.

Assume that the following ratios are typical of companies in the building supply industry:

Current ratio	2.5
Acid-test ratio	1.2
Average collection period	18	days
Average sale period	50	days
Debt-to-equity ratio	0.75
Times interest earned	6.0
Return on total assets	10	%
Price-earnings ratio	9

Required:

.

Sycamore State Bank is uncertain whether the loan should be made. To assist it in making a decision, you have been asked to compute the following amounts and ratios for both this year and last year: 1. working capital: this year? last year? 2. current ratio: this year? last year? 3. acid-test ratio: this year? last year? 4. average collection period: (accounts receivable at the beginning of lasy year totaled $260,000) (in days) This year? last year? 5. average sale period: (the inventory at the beginning of last year totaled $513,000) this year? last year? 6. debt to equity ratio: this year? last year? 7. times interest earned: this year? last year? ---------------------------------------------------------------------------------------------------------------------------------------- 2. For both this year and last year: a. Present the balance sheet in common-size form. (Round your percentage answers to 1 decimal place i.e., 0.123 is considered as 12.3. Due to rounding, figures may not fully reconcile down a column.) b. Present the income statement in common-size form down through net income. (Round your percentage answers to 1 decimal place i.e., 0.123 is considered as 12.3. Due to rounding, figures may not fully reconcile down a column.)

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