Venice InLine, Inc. Income Statement For the Year Ended December 31 (dollars in thousands)
	This Year
Sales (all on account)	$	645.0
Cost of goods sold		434.0
Gross margin		211.0
Selling and administrative expenses:
Selling expenses		63.0
Administrative expenses		117.0
Total selling and administrative expenses		180.0
Net operating income		31.0
Interest expense
Net income before taxes		31.0
Income taxes (30%)		9.3
Net income	$	21.7

Required:

1-a. 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

1-b. 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 older plastic injection molding machine. Russ had originally planned to sell the old machine but found that it is still needed whenever the plastic injection molding process is a bottleneck. When Russ discussed his cash flow problems with his brother-in-law, he suggested to Russ that the old equipment be sold or at least reclassified as inventory on the balance sheet because it could be readily sold. At present, the equipment is carried in the Property and Equipment account and could be sold for its net book value of $115,000. The bank does not require audited financial statements.

a. Calculate the following if the old machine is considered as inventory.

b. Based on the 2a 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?

I only need 2a and 2c answered :)