Crowley Building Supply sells various building materials to retail outlets. The company has just approached Sycamore State Bank requesting a $300,000 loan to strengthen the Cash account and to pay certain pressing short-term obligations. The companys financial statements for the most recent two years follow:

Crowley Building Supply
Comparative Balance Sheets
	This Year		Last Year
Assets
Current assets:
Cash	$	62,000	$	147,000
Marketable securities		7,000		25,000
Accounts receivable, net		487,000		299,000
Inventory		954,280		594,140
Prepaid expenses		25,000		32,000
Total current assets		1,535,280		1,097,140
Plant and equipment, net		1,652,620		1,557,580
Total assets	$	3,187,900	$	2,654,720
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities	$	817,000	$	456,000
Bonds payable, 8%		622,000		622,000
Total liabilities		1,439,000		1,078,000
Stockholders' equity:
Preferred stock, $25 par, 7%		329,000		329,000
Common stock, $10 par		521,000		521,000
Retained earnings		898,900		726,720
Total stockholders' equity		1,748,900		1,576,720
Total liabilities and stockholders' Equity	$	3,187,900	$	2,654,720

Crowley Building Supply
Comparative Income Statement and Reconciliation
	This Year		Last Year
Sales	$	5,043,000	$	4,385,000
Cost of goods sold		3,885,600		3,449,600
Gross margin		1,157,400		935,400
Selling and administrative expenses		654,400		535,400
Net operating income		503,000		400,000
Interest expense		49,760		49,760
Net income before taxes		453,240		350,240
Income taxes (35%)		158,634		122,584
Net income		294,606		227,656
Dividends paid:
Preferred dividends		23,030		23,030
Common dividends		99,396		63,906
Total dividends paid		122,426		86,936
Net income retained		172,180		140,720
Retained earnings, beginning of year		726,720		586,000
Retained earnings, end of year	$	898,900	$	726,720

During the past year, the company has expanded the number of lines that it carries in order to stimulate sales and increase profits. It has also moved aggressively to acquire new customers. Sales terms are 2/10, n/30. All sales are on account.

Assume that the following ratios are typical of companies in the building supply industry:

Current ratio	2.5
Acid-test ratio	1.2
Average collection period	18	days
Average sale period	50	days
Debt-to-equity ratio	0.75
Times interest earned	6.0
Return on total assets	10	%
Price-earnings ratio	9

Required:

1.	Sycamore State Bank is uncertain whether the loan should be made. To assist it in making a decision, you have been asked to compute the following amounts and ratios for both this year and last year:

a.	Working capital.

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

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

d.	Average collection period. (The accounts receivable at the beginning of last year totaled $266,000.) (Round your intermediate calculations and final answers to 1 decimal place. Use 365 days in a year.)

e.	Average sale period. (The inventory at the beginning of last year totaled $519,000.) (Round your intermediate calculations and final answers to 1 decimal place. Use 365 days in a year.)

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

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

2.	For both this year and last year:

a.	Present the balance sheet in common-size form. (Round your percentage answers to 1 decimal place i.e., 0.123 is considered as 12.3. Due to rounding, figures may not fully reconcile down a column.)

b.	Present the income statement in common-size form down through net income. (Round your percentage answers to 1 decimal place i.e., 0.123 is considered as 12.3. Due to rounding, figures may not fully reconcile down a column.)

	Crowley Building Supply Common-Size Income Statements This Year Last Year Sales % % Cost of goods sold % % Gross margin 0.0 % 0.0 % Selling and administrative expenses % % Net operating income 0.0 % 0.0 % Interest expense % % Net income before taxes 0.0 % 0.0 % Income taxes % % Net income 0.0 % 0.0 %