You have been provided with the following Balance Sheet & Accounts Receivable data for the Winchester Brothers Company Accounts Receivable as at December 31, 2020 Winchester Brothers Company Balance Sheet As at December 31, 2020 Current (less than 30 days) $ 62,975 31-60 days 22,900 61-90 days 18,320 90+ days 10,305 $ 114,500 Cash Accounts Receivable Raw materials Inventory Finished Goods Inventory Current liabilities Fixed Assets Accumulated depreciation TOTAL ASSETS $ 5,500 114,500 30,000 55,000 205,000 415,000 (180,000) $ 440,000 Bank Operating line data: The maximum amount of the operating line is $150,000. The operating line restrictions are: 75% of receivables less than 90 days old, and 45% of finished goods inventory. Accounts payable Loan payable Current liabilities Equity Retained Earnings Total Equity TOTAL LIAB & EQUITY $ 115,000 95,000 210,000 50,000 180,000 230,000 $ 440,000 24 25 REQUIRED 26 1 Calculate the maximum the bank will lend Winchester Brothers. Have they boorrowed too much? If so, how much beyond the maximum? 27 2 Calculate the debt/equity ratio and the current ratio. 28 3 The bank's covenants require that Winchester Borthers the following minimum ratio's. Comment on whether or not they met the requirements. 29 Minimum debt/equity ratio of 0.5-1 30 Minimum Current ratio of 1:1 31 32 WORK AREA IS BELOW