Financial Situation : All calculator sales were made to retailers or wholesalers at net 30.

Officially, Caltron charged interest on overdue accounts, but had not been enforcing that rule in attempts to expand sales to match the new capacity. Most components and supplies were purchased on the terms 2/10, net 30. Interest was paid when the company took longer than 30 days. Caltron had a $1,000,000 line of credit with the Bank of Montreal.

The company had to maintain a coverage ratio of 2.0 with accounts receivable being valued at 75 per cent and inventory at 50 per cent. A current ratio of 1.5 was also required and a times interest earned ratio of at least 2.0. Caltron could negotiate a line of credit of more than $1,000,000, but the bank would only authorize it if the institution had sufficient loanable funds and the company was in good financial condition.

The economy was just entering what was expected to be a mild recession. All dividend payments to Pulsar were suspended in 2001 in anticipation of the plant modernization and expansion

1.) Fill in the Financial Ratio's for year 2003, 2002 & 2001

Financial Ratio's	2003	2002	2001	Avg
Current Ratio				2.7
Cash Ratio				0.45
Inventory Turnover in Days				60 days
Accounts Receivable Turnover in Days				32 days
Accounts Payable Turnover in Days				15 days
Cash Conversion Cycle				77 days
Fixed Assets Turnover				7
Total Assets Turnover				2.5
Debt Ratio				0.4
Times Interest Earned				8
Cost of Borrowing				0.068
Gross Profit Margin				0.22
Operating Profit Margin				0.13
Net Profit Margin				0.06
Return on Assets				0.15
Return on Equity				0.25

Income Statement	2003	2002	2001
Sales	6,854,000	5,128,800	2,954,000
Cost of Goods Sold	5,825,900	4,308,192	2,422,280
Gross Profit	1,028,100	820,608	531,720
Depreciation	120,000	116,960	18,900
Others Operating Expenses	685,400	512,880	236,320
Earnings Before Interest and Taxes	222,700	190,768	276,500
Interest	215,683	140,847	37,875
Earnings Before Taxes	7,017	49,921	238,625
Income Taxes	2,807	19,969	95,450
Net Income	4,210	29,953	143,175
Units Sold	527,230	366,340	196,930

Balance Sheet	2003	2002	2001
Cash	24,00	10,00	9,000
Short-term Investments	53,519	0	295,340
Accounts Receivable	878,776	617,160	301,200
Inventories	1,716,480	1,287,360	518,460
Total Current Assets	2,672,775	1,914,520	1,124,000
Property, Plant, and Equipment	1,706,363	1,402,500	691,000
Less: Accumulative Depreciation	-383,160	-263,160	-146,200
Total Assets	3,995,978	3,053,860	1,668,800
Accounts Payable	948,802	511,267	145,600
Line of Credit	875,635	510,582	200,000
Current Portion of Long-term Debt	100,000	32,340	30,050
Total Current Liabilities	1,924,437	1,054,189	375,650
Long-term Debt	1,067,660	1,000,000	323,432
Common Shares	660,000	660,000	660,000
Retained Earnings	343,881	339,671	309,718
Total Liabilities and Equity	3,995,978	3,052,860	1,668,800

Cash Flow Statement	2003	2002
Operations
Net Income	4,210	29,953
Add: Depreciation	120,000	116,960
Change in Accounts Payable	437,535	365,667
Less: Change in Accounts Receivabe	261,616	315,960
Change in Inventory	429,120	768,900
Total	-128,991	-572,280
Investments
Purchase of Property, Platn &Equipment	-303,863	-711,500
Financing
Change in Line of Credit	365,053	310,582
Change in Long Term Debt	135,320	678,858
Total	500,373	989,440
Change in Cash/Cash Equivalents	67,519	-294,340