Gilmore, Inc. builds recreational equipment. Its sales are very seasonal with most of its sales

occurring in the February to August time period time period. The following data contain

some working capital to sales ratios as well as a sales projection for the next four quarters:

Cash + MKt. sec. + A/R + Inventory

= 0.30

Sale

Accounts payable

= 0.15

Sales

(In the table below, dollar amounts are in millions.)

Jan. - Mar.

Apr. - June

July-Sept.

Oct.-Dec.

Sales

$ 5.00

$ 50.00

$ 30.00

$ 5.00

Purchases

$ 22.50

$ 13.50

$ 2.25

$ 2.25

Gilmore's level of net fixed assets is $1,500,000, and its capital structure consists of $1,500,000

of shareholders' equity. Current liablities consist soley of accounts payable. Net income as a

percentage of sales is forcasted to be 7.5 percent for the coming year. Dividends equal to net

income are paid out.

b. Calculate the current ratio for Gilmore at the end of each quarter for each of the three financing strategies: aggressive, conservative, and moderate (using half long-term and half short-term financing).