The San Jose Company has a Dun & Bradstreet rating of 4A-2. Inquiries into its banking disclosed balances generally in the low seven figurrs. Five suppliers to San Jose revealed that the firm takes its discounts from the three offering 2/10, net 30 terms, and it is about 15 days late in paying the two firms offering terms of net 30.

478 Part V L i q u i d i t y and Working Capital Management San Jose Company Income Statement (in millions)

20x1 20x2 20x3 Net credit sales $15.0 $15.8 $16.2 Cost of goods sold -11.3 12.1 13.0 Gross profit $ 3.7 $3.7 $3.2 Operating expenses 1.2 1.2 Net profit before taxes $ 2.6 $ 2.5 $ 2.0 Taxes 1.3 1.2 1.0 Profit after taxes $$TXm Dividends >-.3 -O.

Total income $-1.0 $-1.0 $1.0