6. The Pottsville Manufacturing Corporation is considering extending trade credit to the San Jose Company. Examination of the records of San Jose has produced the following financial statements:

San Jose Company Balance Sheet (in millions)

Assets Current assets Cash $ 1.5 5 1.6 $ 1.6 Receivables 1.3 1.8 2.5 Inventories (at lower of cost or market) 1.3 2.6 4.0 Other Total current assets Fixed assets Buildings (net) 2.0 1.9 1.8 Machinery and equipment (net) 7.0 6.5 6.0 Total fixed assets $9.0 $8.4 $7.8 Other assets -1.0 -.8 -.6 Total assets -$14.5 -$15.7= $16.9 Liabilities and shareholders' eauitv 1, Current liabilities Notes payable $ 2.1 $ 3.1 $ 3.8 Trade payables .2 .4 .9 Other payables -.2 -.2 -.2 Total current liabilities $ 2.5 $ 3.7 $ 4.9 Term loan Total liabilities Shareholders' equity Common stock Preferred stock Retained earnings Total liabilities and equity