Joseph Berio is a loan officer with the First Bank of Tennessee. Red Brick, Inc., a major producer of masonry products, has applied for a short-term loan. Red Brick supplies building material throughout the southern states, with brick plants located in Tennessee, Alabama, Georgia, and Indiana.

The firms income statement and balance sheet are given below. The third table presents both a ratio analysis of Red Bricks previous years financial statements and the industry averages of the ratios.

Red Brick Balance Sheet as of 12/31/20X2 Assets Liabilities and Stockholders Equity Cash $ 400,000 Accounts payable $ 33,000,000 Accounts receivable 37,000,000 Notes payable 5,000,000 Inventory 73,000,000+ long-term debt 43,000,000 Plant and equipment 137,000,000 Stockholders' equity 166,400,000 $247,400,000 $247,400,000 of are on Red Brick Income Statement (for the period ending December 12/31/20x1) Sales $201.000.000 Cost of goods sold 197,000,000 Administrative expenses 35.000.000 Operating income $-31,000,000 Interest expense 6,000,000 Taxes 400.000 Net Income $ 37,400,000 Current ratio Quick ratio Inventory turnover Average collection period Debt ratio (debt/total assets) Times-interest-earned Return on equity Retum on assets Operating profit margin Net profit margin Company's Ratios Industry (Previous Year) Average 2.8:1 2.0:1 1.0:1 0.9:1 4.6% 4.62 46 days 47 days 30% -5.2 14.1% -16.5% 1024 -11.95 14.9% -14.3%