Secure https://1210. M ucation.com/._-UTUS TUTUNUT Venice InLine, Inc., was founded by Russ Perez to produce a specialized in-line skate he had di doing aenal tricks. Up to this point, Russ has financed the company with his own savings and generated by his business. However, Russ now faces a cash crisis. In the year just ended shortage of high-impact roller bearings developed just as the company was beginning produc Christmas season, Russ had been assured by his suppliers that the roller bearings would be time to make Christmas shipments, but the suppliers were unable to fully deliver on this pro consequence, Venice InLine had large stocks of unfinished skates at the end of the year and wa fill all of the orders that had come in from retailers for the Christmas season. Consequently, below expectations for the year, and Russ does not have enough cash to pay his creditors. Well before the accounts payable were due, Russ visited a local bank and inquired about loan. The loan officer at the bank assured Russ that there should not be any problem getting al off his accounts payable providing that on his most recent financial statements the current ratio 2.0, the acid-test ratio was above 1.0, and net operating income was at least four times the inte proposed loan, Russ promised to return later with a copy of his financial statements Russ would like to apply for a $115,000 six-month loan bearing an interest rate of 7% per unaudited financial reports of the company appear below Venice InLine, Inc. Comparative Balance Sheet As of December 31 (dollars in thousands) This Year Last Year Assets Current assets: Cash Accounts receivable net Inventory Prepaid expenses $ 1172 90.0 250.0 55.0 $ 235.0 85 0 1700 53.0 Total current assets Property and equipment 5122 395.0 543.0 265.0 Total assets 9072 $ 8080 Liabilities and Stockholders' Equity Current liabilities Accounts payable Accrued liabilities Total current liabilities Long-term liabilities Total liabilities Venice InLine, Inc. Income Statement For the Year Ended December 31 (dollars in thousands) Sales (all on account) Cost of goods sold This Year $ 655.0 404.0 Gross margin 251.0 Selling and administrative expenses Selling expenses Administrative expenses 98.0 127.0 Total selling and administrative expenses 225.0 26.0 Net operating income Interest expense Net income before taxes Income taxes (30%) 26.0 7.8 Net income $ 182 Required: 1a. Based on the above unaudited financial statement of the current ye your answers to 2 decimal places.) Required: a. Based on the above unaudited financial statement of the current year calculate th your answers to 2 decimal places.) Current ratio Acid-test ratio Number of times of the net operating income to the interest on the proposed loan 1b. Based on the statement made by the loan officer, would the company qualify for th Yes No 2. Last year Russ purchased and installed new, more efficient equipment to replace furnace. Russ had originally planned to sell the old equipment, but found that it is the heat-treating process is a bottleneck. When Russ discussed his cash flo brother-in-law, he suggested to Russ that the old equipment be sold or at least red on the balance sheet because it could be readily sold. At present, the equip Property and Equipment account and could be sold for its net book value of $79 not require audited financial statements a. Calculate the following if the old machine is considered as inventory. (Round decimal places.) Current ratio Acid-test ratio