Question:

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 liabilities consist solely of accounts payable. Net income as a percentage of sales is forecasted 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).