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Question 5 (1 point) PROBLEM 5 (10 marks) The following information pertains to Greenich Company. Assets Year 2 Year1 Cash and short-term investments $ 45,000 $ 35,000 Accounts receivable (net) 25,000 25,000 Inventory 20,000 20,000 Capital Assets (net) 210.000 215.000 Total Assets $300,000 $ 295,000 Liabilities and Shareholders' Equity Current liabilities $ 60,000 $ 70,000 Long-term liabilities 90,000 90,000 Shareholders' equity 150.000 135.000 Total liab, shareholders' equity $300.000 $295.000 Statement of Earnings Sales $ 80,000 Cost of goods sold 45,000 Gross margin 35,000 Operating expenses 20.000 Net earnings $ 15.000 Number of common shares 6,000 Market price of a common share $20 Depreciation, included in operating expenses $5,000 Instructions (a) You are a banker considering a short-term bank loan of $50,000 for Greenich Company. Choose 3 ratios that you believe to be most appropriate in this situation, indicate the reason for each choice (rather than a description of the ratio), and calculate each ratio for year 2. Indicate your responses in the spaces provided. Ratio formulae are provided on the next page. Ratio 1 Name Reason Calculation Ratio 2 Name Reason Calculation Ratio 3 Name Reason Calculation (b) Based on your analysis above, indicate whether would you grant the company the loan? Explain why or why not