BBS has just approached Bulldog requesting a $300,000 loan to strengthen the Cash account and to pay certain, pressing short-term obligations. Bulldog is uncertain whether the loan should be made, and has asked your group to analyze the Companys financial situation and make a recommendation.

You determine the following ratios are typical of companies in BBS industry:

Current Ratio	2.5
Acid-Test Ratio	1.2
Average Collection Period	18 days
Average Sale Period	50 days
Return on Assets	10%
Debt-to-Equity Ratio	0.75
Times Interest Earned	6.0
Price-Earnings Ratio	9

Prepare Common Size Statements for BBS (Balance Sheet and Income Statement). Compute the following ratios (for the current and previous year) that will help the banks decision whether to grant the loan.

1. Working Capital
2. Current Ratio
3. Acid-Test Ratio
4. Accounts Receivable Turnover
5. Average Collection Period
6. Gross Margin Percentage
7. Inventory Turnover
8. Average Sale Period
9. Debt-to-Equity Ratio
10. Times Interest Earned

Comparative Balance Sheet December 31 This Year Last Year 2 Years Ago 90,000 $ 150,000 Assets Current Assets: Cash Marketable Securities Accounts Receivables, Net Inventory Prepaid Expenses Total Current Assets Plant and Equipment, Net Total Assets 650,000 1,300,000 20,000 2,060,000 1,940,000 4,000,000 $ 200,000 50,000 400,000 800,000 20,000 1,470,000 1,830,000 $ 3,300,000 350,000 720,000 20,000 1,240,000 1,460,000 2,700,000 $ $ Liabilities and Stockholders' Equity Liabilities Current Liabilities Bonds Payable, 12% Total Liabilities $ $ $ 1,100,000 750,000 1,850,000 600,000 750,000 1,350,000 164,000 750,000 914,000 Stockholders' Equity Preferred Stock, $50 par, 8% Common Stock, $10 par Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 200,000 500,000 1,450,000 2,150,000 4,000,000 200,000 500,000 1,250,000 1,950,000 3,300,000 200,000 500,000 1,086,000 1,786,000 2,700,000 $ $ Brazos Building Supply Company, Inc. Comparative Income Statement and Reconciliation $ Sales Cost of Goods Sold Gross Profit Selling & Administrative Expenses Net Operating Income Interest Expense Net Income before Taxes Income Taxes (40%) Net Income This Year 7,000,000 5,400,000 1,600,000 970,000 630,000 90,000 540,000 216,000 324,000 Last Year $ 6,000,000 4,800,000 1,200,000 710,000 490,000 90,000 400,000 160,000 240,000 Dividends Paid: Preferred Dividends Common Dividends Total Dividends Paid 16,000 108,000 124,000 16,000 60,000 76,000 Net Income Retained 200,000 164,000 Retained Earnings, Beginning of Year Retained Earnings, End of Year $ 1,250,000 1,450,000 1,086,000 $ 1,250,000 **Stock Price $ 45 $ 36