( a) does PMI satisfy the loan covenant in both years?

(b) based on the loan size requirement only of the loan covenant, what is the maximum amount of loan PMI could borrow in each year? ( round figure in thousand to 2 decimal, e.g 18.42)

Pharoah Manufacturing Inc. (PMI) has a loan from the Canadian National Bank to help finance its working capital. The terms of the loan are that the bank will lend PMI an amount up to 33\\% of its inventory balance and 50\\% of its accounts receivable. One of the loan covenants requires that PMI maintain a current ratio greater than 2.0. Information related to PMI's current assets and current liabilities is shown in the following table