Alitalia manufacturing company was organized five year ago and manufactures toys. Its most recent three years balance sheets and income statements are reproduced below:

Alitalia Manufacturing Company

Balance Sheet Statement

June 30, 2020, Year 2019 and Year 2018

Particulars	2020	2019	2018
Assets
Cash	$12,000	$15,000	$16,000
Accounts receivable, net	1,83,000	80,000	60,000
Inventory	1,42,000	97,000	52,000
Other current assets	5,000	6,000	4,000
Plant and equipment, net	1,60,000	1,10,000	70,000
Total assets	$5,02,000	$3,08,000	$2,02,000
Liabilities and Equity
Accounts Payable	$1,47,800	$50,400	$22,000
Income tax payable	30,000	14,400	28,000
Long term liabilities	1,20,000	73,000	22,400
Common stock, $5 par value	1,10,000	1,10,000	80,000
Retained earnings	94,200	60,200	49,600
Total liabilities and equity	$5,02,000	$3,08,000	$2,02,000

Alitalia Manufacturing Company

Condensed Income Statement

June 30, 2020, Year 2019 and Year 2018

Particulars	2020	2019	2018
Sales	$16,50,000	$12,50,000	$10,50,000
Cost of goods sold	(9,27,000)	(8,10,000)	(5,12,000)
Gross profit	7,57,000	4,40,000	5,38,000
Marketing and administrative expenses	(6,70,000)	(3,96,700)	(4,67,400)
Operating income	87,000	43,300	70,240
Interest costs	(12,000)	(7,300)	(2,240)
Income before taxes	75,000	36,000	68,000
Income taxes	(30,000)	(14,400)	(28,000)
Net income	$45,000	$21,600	$40,000)

A reconciliation of retained earnings for years ended June 30, Year 4, and Year 5, follows:

Alitalia Manufacturing Company

Condensed Income Statement

June 30, 2020, Year 2019 and Year 2018

Particulars	2020	2019
Balance, Beginning	$60,200	$49,600
Add: Net income	45,000	21,600
Subtotal	1,05,200	71,200
Deduct: Dividend paid	(11,000)	(11,000)
Balance, ending	$94,200	$60,200

Additional Information:

• All sales are on account.

• Long term liabilities are owed to companys bank.

• Terms of sales are net 30 days.

Required:

• Compute the following measures for both Years 2019 and 2020:

• Working capital

• Current ratio

• Acid test ratio

• Accounts receivable turnover ratio

• Collection period of receivables

• Inventory turnover

• Days to sell inventory

• Debt-to-equity ratio

• Time interest earned

• Using Year 2019 as the base year, compute an index-number trend series for:

• Sales

• Cost of goods sold

• Gross profit

• Marketing and administrative costs

• Net income

• Based on your analysis in (a) and (b), prepare a one page report yielding a recommendation on whether to grant a loan to Ian Manufacturing Company support your recommendation with relevant analysis.