Case #21A Gear L.A. Gear, a designer and marketer of athletic and casual footwear, filed for bankruptcy in 1998, however red flags existed long before the firm went bankrupt. Using the information from the common size financial statements and growth rates given, discuss the red flags that existed as early as 1990. Balance Sheet 1990 1989 Cash A/R Inventory Ppd. exp., def. taxes, other Total current assets 37.6 52.3 6.5 43.0 44.1 4.9 92.9 6.5 100.0 3.0 100.0 14.0 Net property and equipment Other assets Total assets Line of credit A/P Accrued expenses Taxes payable Total current liabilities 25.8 6.1 11.5 9.6 13.0 36.9 31.8 100.0100.0 43.4 25.1 Common stock Retained earnings Total liabilities and sharcholders' equity 8