Q1: Will the proposed max loan of $350,000 be sufficient to fund the firm in 2007 if Jones continues with their current payment practices?

Exhibit 1 : Income Statements ( thousands of dollars )* for Years Ending December 31 , 2001- 2006 , and for the first quarter 2007 Q1 2004 2005 2006 2007 a Net sales $1 , 624 $1, 916 $2, 242 $608 Cost of goods sold $1 , 304 $1 , 535 $1 , 818 $499 Gross profit on sales $320 $381 $424 $109 Operating expense " $272 $307 $347 $94 Interest expense* $27 $30 $31 85 Net income before taxes $21 $44 $46 $7 Provision for income taxes $7 $15 $16 $2 Net income* $14 $29 $30 $5 Exhibit 2: Balance Sheet ( thousands of dollars ) as of December 31 , 2004 - 2006 and March 31 , 2007 Q1 2004 2005 20:06 2007 Cash $15 $53 $23 $33 Accounts receivable $187 $231 $264 $290 Inventory* $243 $278 $379 $432 Total Current Assets $475 $562 $666 $755 Property & equipment $187 $202 $252 $252 Accumulated depreciation* ( 574 ) (599 ) ( $134 ) $ 1 42 ) Total PP&E , net $113 $103 $118 $110 Total Assets $588 $665 $784 $865 Accounts payable* $36 $42 $120 $203 Line of credit payable $149 $214 $249 $250 Accrued expenses $13 $14 $14 $12 Long term debt , current portion $24 524 $24 $24 Total Current liabilities $222 $294 $407 $489 Long-term debt $182 $134 $128 Total liabilities $404 $452 $541 $617 Net worth $184 $213 $243 $248 Total Liabilities and Net Worth $588 $665 $784 $865