THANK YIU #7

Venice inLine, Incorporated, was founded by Russ Perez to produce a specialized in-line skate he had designed for doing aerial tricks Up to this point, Russ has financed the company with his own savings and with cash generated by his business. However, Russ now faces a cash crisis. In the year just ended, an acute shortage of high-impact roller bearings developed just as the company was beginning production for the Christmas season. Russ had been assured by his suppliers that the roller bearings would be deliered in time to make Christmas shipments, but the suppliers were unable to fully deliver on this promise. As a consequence, Venice InLine had large stocks of unfinished skates at the end of the year and was unable to fill all of the orders that had come in from retailers for the Christmas season. Consequently, sales were below expectations for the year, and Russ does not have enough cash to pay his crecitors, Well before the accounts payable were due, Russ visited a local bank and inquirod about obtaining a loan. The loan officer at the bank assured Russ that there should not be any problem getting a loan to pay off his accounts payable-providing that on his most recent financial statements the current ratio was above 2.0 , the acid-test ratio was above 1.0 , and net operating income was at ieast four times the interest on the proposed loan. Russ promised to return later with a copy of his financial statements. Russ would like to apply for a $130.000 six-month loan bearing an interest rate of 8% per year. The unaudited financial reports of the: company appear below: Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment Total assets \begin{tabular}{rr} $127.9 & $265.0 \\ 115.0 & 65.8 \\ 250.0 & 178.6 \\ 45.0 & 38.0 \\ \hline 537.9 & 538.8 \\ 465.0 & 245.8 \\ \hline$942.9 & $783.6 \\ \hline \end{tabular} Liabilities and Stockholders' Equity current liabilities: Accounts payable Accrued liabilities Total current liabilities Long-term liabilities Total Liabilities Stockholders' equity: Common stock and additional paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity \begin{tabular}{rr} $276.0 & $150.0 \\ 30.0 & 15.0 \\ \hline 306.0 & 165.0 \end{tabular} Venice InLine, Incorporated Income Statement For the Year Ended December 31 (dollars in thousands) Sales (all on account) Cost of goods sold Gross margin \begin{tabular}{rr} - & - \\ 306.0 & 165.0 \\ \hline \end{tabular} Selling and administrative expenses: selling expenses Administrative expenses Total selling and administrative expenses Net operating income \begin{tabular}{rr} 150.0 & 156.0 \\ 486.9 & 468.0 \\ \hline 636.9 & 618.0 \\ \hline$942.9 & $783.0 \\ \hline \end{tabular} Interest expense Net income before taxes Income taxes (38%) Net income This Year $655.0383.0272.0 98.0147.0245.027.0 27.6 8.1$18.9 $82,000. The bank does not require audited financial statements. a. Calculate the following if the old machine is considered as inventory. b. Based on the 20 answer would the company qualify for the loan? c. Calculate the following if the old machine is sold off. d. Based on the 2c answer would the company qualify for the loan? Complete this question by entering your answers in the tabs below. Based on the above unaudited financial statement of the current year calculate the following: Current ratio Acid-test ratio Number of times of the net operating income to the interest on the proposed loan (Round your answers to 2 decimal places.) 2. Last year Russ purchased and installed new, more efficient equipment to replace an had originally planned to sell the old machine, but found that it is still needed whenever bottleneck. When Russ discussed his cash flow problems with his brother-in-law, he suc at least reclassified as inventory on the balance sheet because it could be readily sold. Property and Equipment account and could be sold for its net book value of $82,000. statements. a. Calculate the following if the old machine is considered as inventory. b. Based on the 2 a answer would the company qualify for the loan? c. Calculate the following if the old machine is sold off. d. Based on the 2c answer would the company qualify for the loan? Complete this question by entering your answers in the tabs below. Based on the statement made by the loan officer, would the company qualify for the loan? 2. Last year Russ purchased and installed new, more efficient equipment to replace an had originally planned to sell the old machine, but found that it is still needed whenever bottleneck. When Russ discussed his cash flow problems with his brother-in-law, he suc at least reclassified as inventory on the balance sheet because it could be readily sold. Property and Equipment account and could be sold for its net book value of $82,000. T statements. a. Calculate the following if the old machine is considered as inventory. b. Based on the 2 a answer would the company qualify for the loan? c. Calculate the following if the old machine is sold off. d. Based on the 2c answer would the company qualify for the loan? Complete this question by entering your answers in the tabs below. Last year Russ purchased and installed new, more efficient equipment to replace an older p Russ had originally planned to sell the old machine, but found that it is still needed whenev process is a bottleneck. When Russ discussed his cash flow problems with his brother-in-lav old machine be sold or at least reclassified as inventory on the balance sheet because it cou the machine is carried in the Property and Equipment account and could be sold for its net does not require audited financial statements. Calculate the following if the old machine is c your answers to 2 decimal place.) 2. Last year Russ purchased and installed new, more efficient equipment to replace an had originally planned to sell the old machine, but found that it is still needed wheneve bottleneck. When Russ discussed his cash flow problems with his brother-in-law, he su at least reclassified as inventory on the balance sheet because it could be readily sold. Property and Equipment account and could be sold for its net book value of $82,000. statements. a. Calculate the following if the old machine is considered as inventory. b. Based on the 2 a answer would the company qualify for the loan? c. Calculate the following if the old machine is sold off. d. Based on the 2c answer would the company qualify for the loan? Complete this question by entering your answers in the tabs below. Last year Russ purchased and installed new, more efficient equipment to replace an older Russ had originally planned to sell the old machine, but found that it is still needed whenev process is a bottleneck. When Russ discussed his cash flow problems with his brother-in-la old machine be sold or at least reclassified as inventory on the balance sheet because it co the machine is carried in the Property and Equipment account and could be sold for its net does not require audited financial statements. Based on the 2 a answer, would the company 2. Last year Russ purchased and installed new, more efficient equipment to replace an had originally planned to sell the old machine, but found that it is still needed whenever bottleneck. When Russ discussed his cash flow problems with his brother-in-law, he suc at least reclassified as inventory on the balance sheet because it could be readily sold. Property and Equipment account and could be sold for its net book value of $82,000. T statements. a. Calculate the following if the old machine is considered as inventory. b. Based on the 2 a answer would the company qualify for the loan? c. Calculate the following if the old machine is sold off. d. Based on the 2c answer would the company qualify for the loan? Complete this question by entering your answers in the tabs below. Last year Russ purchased and installed new, more efficient equipment to replace an older p Russ had originally planned to sell the old machine, but found that it is still needed whenev process is a bottleneck. When Russ discussed his cash flow problems with his brother-in-lav old machine be sold or at least reclassified as inventory on the balance sheet because it cot the machine is carried in the Property and Equipment account and could be sold for its net does not require audited financial statements. Calculate the following if the old machine is s decimal place.) 2. Last year Russ purchased and installed new, more efficient equipment to replace an had originally planned to sell the old machine, but found that it is still needed whenever bottleneck. When Russ discussed his cash flow problems with his brother-in-law, he suc at least reclassified as inventory on the balance sheet because it could be readily sold. Property and Equipment account and could be sold for its net book value of $82,000. T statements. a. Calculate the following if the old machine is considered as inventory. b. Based on the 2 a answer would the company qualify for the loan? c. Calculate the following if the old machine is sold off. d. Based on the 2c answer would the company qualify for the loan? Complete this question by entering your answers in the tabs below. Last year Russ purchased and installed new, more efficient equipment to replace an oider Russ had originally planned to sell the old machine, but found that it is still needed whenev process is a bottleneck. When Russ discussed his cash flow problems with his brother-in-lai old machine be sold or at least reclassified as inventory on the balance sheet because it co the machine is carried in the Property and Equipment account and could be sold for its net does not require audited financial statements. Based on the 2c answer, would the company