(Ratio Computation and Analysis; Liquidity) As loan analyst for Utrillo Bank, you have been presented the following information.

Each of these companies has requested a loan of $50,000 for 6 months with no collateral offered. Inasmuch as 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.

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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. Lautrec Co. 220,000 $ 120,000 $ 320,000 302,000 570,000 518,000 910,000 1,140,000 500,000 612,000 $1,410,000 $1,752,000 $ 305,000 400,000 705,000 $ 350,000 500,000 902,000 $1,410,000 $1,752,000 $ 930,000 $1,500,000 30% 40%