You have just been hired as a loan officer at San Diego State Bank. Your supervisor has given you a file containing a request from Mobile Company, a manufacturer of auto components, for a $1,000,000 five-year loan. Financial statement data on the company for the last two years are given below

Mobile Company
Comparative Balance Sheet
	This Year		Last Year
Assets
Current assets:
Cash	$	263,700	$	337,550
Marketable securities		0		118,000
Accounts receivable, net		942,000		645,000
Inventory		1,358,500		758,500
Prepaid expenses		102,100		87,100
Total current assets		2,666,300		1,946,150
Plant and equipment, net		3,454,800		3,110,400
Total assets	$	6,121,100	$	5,056,550
Liabilities and Stockholders Equity
Liabilities:
Current liabilities	$	1,280,400	$	765,200
Bonds payable		1,318,000		1,118,000
Total liabilities		2,598,400		1,883,200
Stockholders' equity:
Preferred stock, 8%, $30 par value		600,000		600,000
Common stock, $40 par value		2,000,000		2,000,000
Retained earnings		922,700		573,350
Total stockholders' equity		3,522,700		3,173,350
Total liabilities and stockholders' equity	$	6,121,100	$	5,056,550

Mobile Company
Comparative Income Statement and Reconciliation
	This Year		Last Year
Sales	$	5,514,000	$	4,334,000
Cost of goods sold		4,127,000		3,217,000
Gross margin		1,387,000		1,117,000
Selling and administrative expenses		549,000		529,000
Net operating income		838,000		588,000
Interest expense		137,500		117,500
Net income before taxes		700,500		470,500
Income taxes (30%)		210,150		141,150
Net income		490,350		329,350
Dividends paid:
Preferred stock		48,000		48,000
Common stock		93,000		69,000
Total dividends paid		141,000		117,000
Net income retained		349,350		212,350
Retained earnings, beginning of year		573,350		361,000
Retained earnings, end of year	$	922,700	$	573,350

Loretta Young, who just two years ago was appointed president of Mobile Company, admits that the company has been inconsistent in its performance over the past several years. But Young argues that the company has its costs under control and is now experiencing strong sales growth, as evidenced by the more than 27% increase in sales over the last year. Young also argues that investors have recognized the improving situation at Mobile Company, as shown by the jump in the price of its common stock from $43.00 per share last year to $55.00 per share this year. Young believes that with strong leadership and with the modernized equipment that the $1,000,000 loan will enable the company to buy, profits will be even stronger in the future.

Anxious to impress your supervisor, you decide to generate all the information you can about the company. You determine that the following ratios are typical of companies in Mobiles industry:

Current ratio	2.3
Acid-test ratio	1.2
Average collection period	31	days
Average sale period	60	days
Return on assets	9.5	%
Debt-to-equity ratio	0.65
Times interest earned	5.7
Price-earnings ratio	10

ou decide, finally, to assess creditor ratios to determine both short-term and long-term debt paying ability. For both this year and last year, compute:

a.	Working capital.

b.	The current ratio. (Round your answers to 2 decimal places.)

c.	The acid-test ratio. (Round your answers to 2 decimal places.)

d.	The average collection period. (The accounts receivable at the beginning of last year totaled $520,000.) (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to the nearest whole number.)

e.	The average sale period. (The inventory at the beginning of last year totaled $650,000.) (Use 365 days in a year. Round your intermediate calculations to 2 decimal and final answers to the nearest whole number.)

f.	The debt-to-equity ratio. (Round your answers to 2 decimal places.)

g.	The times interest earned. (Round your answers to 1 decimal place.)