Rovale Cavalier Company Company Balance Sheet Cash Accounts Receivable, Net Inventory Equipment, Net Other Assets Total Assets Current Liabilities Note Payable (long-term) Common Stock (par $20) Additional Paid-In Capital Retained Earnings Total Liabilities and Stockholders' Equity Income Statement Sales Revenue Cost of Goods Sold Other Expenses $21,000 50,000 12,000 17,000 152,000 42,000 $852,000 $273,000 51,000 102,000 542,000 136,000 $112,000 7,000 47,000 206,000 5,000 8,000 $852,000 $273,000 182,000 476,000 46,000 36,000 $788,000 $268,000 146,000 91,000 $76,000 31,000 476,000 236,000 Net Income Other Data Per share price at end of year Selected Data from Previous Year Accounts Receivable, Net Note Payable (long-term) Equipment, Net Inventory Total Stockholders' Equity $ 20.00 12.00 $43,000 10,000 47,000 152,000 34,000 219,000 182,000 542,000 91,000 558,000 These two companies are in the same business and state but different cities. Each company has been in operation for about 10 years. Both companies received an unqualified audit opinion on the financial statements. Royale Company wants to borrow $71,000 cash and Cavalier Company is asking for $26,000. The loans will be for a two-year period. Both companies estimate bad debts based on an aging analysis, but Cavalier has estimated slightly higher uncollectible rates than Royale. Neither company issued stock in the current year. Assume the end-of-year total assets and net equipment balances approximate the year's average and all sales are on account. Cavalier Company Company Royale Ratio Tests of Profitability: 1. Net Profit Margin 2. Gross Profit Percentage 3. Fixed Asset Turnover 4. Return on Equity 964% 39.591% 1.45 13.62% 11.57 % 45.521% 1.76 14.16% Earnings per Share 6. Price/Earnings Ratio Tests of Liquidity: f. Receivables Turnover Days to Collect 8. Inventory Turnover 4.93 5.73 Days to Sell 9.Current Ratio Tests of Solvency: 10. Debt-to-Assets 1.63 6.71