You have just hired as a loan officer for Washington Mutual Savings. Selig Equipment and Mountain Bike, Inc. have both applied for $125,000 nine-month loans to acquire additional plant equipment. Neither company offered any security for the loans. It is the strict policy of the bank to have only $1,350,000 outstanding in unsecured loans at any point in time. Since the bank currently has $1,210,000 in unsecured loans outstanding, it will be unable to grant loans to both companies. The bank president has given you the following selected information from the companies' loan applications.

REQUIRED:Assume that account balances on the balance sheet are representative of the entire year. Based on this limited information, which company would you recommend to the bank president as the better risk for an unsecured loan? Support your answer with any relevant analysis.

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Mountain Bike, Inc. Selig Equipment S 15,000 S 160.000 Cash Accounts receivabhle Inventory Prepaid expenses Total current assets 215.000 470.000 305,000 195.000 180,000 S 715,000 1.455,000 $2,170.000 10.000 S 835.000 1,875.000 S2,710.000 Noncurrent assets Total assets S 325.000 875.000 910.000 S 285,000 950,000 790,000 Current liabilities Long-term liabilities Contributed capital Retained earnings Total liabilities and shareholders' equity 145.000 600.000 $2,170,000 S2.710.000 Net credit sales S1,005,000 S1,625.000 960.000 Cost of goods sold 755,000