Pulsar Inc. is a lumber manufacturer from Ontario, Canada. Pulsar$$s operations are very working capital intensive, as it has to maintain inventory as well as extend credit to its customers. Hence, Pulsar has set up a funding line of credit with the bank to manage its working capital needs. It has currently an approved limit of $$200,000.$

The bank has informed Pulsar of the following restrictions$/$constraints on borrowing under this line:

$60\%$ of the receivables less than $90$ days old

$50\%$ of finished goods inventory

Debt$/$Equity ratio no worse than $0\mathrm{.}5$:$1$

Here is the snapshot of Pulsar$$s latest financial information:

Pulsar has accounts receivable worth $$150,000$ and inventory worth $$200,000$

The ageing schedule of the receivable is as follows:

Maturity

Receivables

$<30$ days

$$100,000$

$>=30$ days to $<90$ days

$$35,000$

$>90$ days

$$15,000$

Inventory

Inventory Type

Inventory

Raw Material

$$50,000$

Finished Goods

$$150,000$

Total liabilities of the company is $$400,000$ while the total equity position is $$1,000,000.$

Use the above information to answer the following questions. Questions must be answered in a Word Doc.

Questions:

Does Pulsar Inc. qualify to borrow against the credit line?