Apache Airlines, a privately held firm, is looking to buy additional gates at its home airport for $800,000 Apache has $240,000 in the bank but that money may not be spent as it is used to pay salaries, suppliers, and equipment Apache asked its bank for a loan but the bank refused saying that Apache's interest-bearing debt to equity was too high at 3.1 The bank said that Apache needed to lower that ratio below 2.3 in order to get the loan Separately, SkyBlue Airlines has approached Apache to see if Apache will buy it.

1. Finally, the CFO wants to know if the consolidated balance sheet's Debt/Equity ratio is below 2.5 if so, it will allow Apache to buy the gates Is Apache's ratio low enough that they can borrow to buy the gates? Show equations used and fill in below,.

	Actual	Projected
Balance Sheet	2018	2019	2020	2021
Cash
Notes and Acc. Rec.
Inventory
Prepaid
Current Assets
Other
Total Assets
Bank Loan
Payables
CPLTD
Other
Current Liabilities
LTD
Equity
Total Liabilities & Equity
Ratios:
Bank Loan to Receivables
Liabilities / Equity
Debt / Equity

Balance Sheet

Balance Sheet Cash Notes and Acc. Rec. Inventory Prepaid Actual 2018 240 7,013 5,588 192 Projected 2019 2020 250 250 8,385 9,998 6,630 7,905 195 232 2021 Notes 250 12,040 9,520 280 Current Assets Other Total Assets 13,033 3,325 16,358 15,460 3,830 19,290 18,385 4,393 22,778 22,090 5,105 27,195 Bank Loan Payables CPLTD Other 6,070 3,057 433 1,477 7,586 3,705 450 1,712 13,453 2,008 9,321 4,417 450 1,994 16,182 1,558 11,404 5,320 450 2,350 19,524 1,108 Current Liabilities LTD 11,037 2,458 Equity Total Liabilities & Equity 2,863 16,358 3,829 19,290 5,038 22,778 6,563 27,195 0.9 Ratios: Bank Loan to Receivables Liabilities / Equity Debt / Equity 0.9 4.0 2.6 4.7 0.9 3.5 2.2 0.9 3.1 3.1 2.0