Skylar Keys organized Keys Computers $10$ years ago in order to produce and sell several computer devices on which he had secured patents. Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $$500,000$ long$-$term loan from NS Bank, $$100,000$ of which will be used to bolster the cash account and $$400,000$ of which will be used to modernize certain important items of equipment. The company's financial statements for the two most recent years follow:

KEYS COMPUTERS

KEYS COMPUTERS

Comparative Income Statement

During the past year, the company introduced several new product lines and raised the selling prices on a number of old product lines in order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new territories. Sales terms are $\frac{2}{10},\frac{n}{30}.$ All sales are on account. Assume that the following ratios are typical of firms in the electronics industry:

Current ratio

Acid$-$test $($quick$)$ ratio

Average age of receivables

Inventory turnover in days

Debt$-$to$-$equity ratio

Times interest earned

Return on total assets

Price$-$earnings ratio

$2\mathrm{.}5$ to $1$

$1\mathrm{.}3$ to $1$

$18$ days

$60$ days

$0\mathrm{.}90$ to $1$

$6\mathrm{.}0$ times

$13\%$

$12$

Required:

To assist the NS Bank in making a decision about the loan, compute the following ratios for both this year and last year $($Use $365$ days a year. Round your intermediate calculations to $1$ decimal place. Round Debt$-$to$-$equity ratio to $3$ decimal places and other answers to $2$ decimal places.$)$:

a$.$ The amount of working capital.

b$.$ The current ratio.

c$.$ The acid$-$test $($quick$)$ ratio.

d$.$ The average age of receivables $($the accounts receivable at the beginning of last year totalled $$252,000).$

e$.$ The inventory turnover in days $($the inventory at the beginning of last year totalled $$504,000).$

f$.$ The debt$-$to$-$equity ratio.

g$.$ The times interest earned.

$\backslash$table$[[$Working capital,This Year,Last Year,$],[$Current ratio,,,,$],[$Acid$-$test ratio,,to $1,,$to $1],[$Average age of receivables,,do $1,,$days$],[$Inventory turnover in days,,days,,days$],[$Debt$-$to$-$equity ratio,,to $1,$to $1,],[$Times interest earned,,times,,$]]$

For both this year and last year:

$($a$)$ Present the balance sheet in common$-$size format. $($Leave no cells blank $-$ be certain to enter $"0"$ wherever required. Round your

For both this year and last year:

$($a$)$ Present the balance sheet in common$-$size format. $($Leave no cells blank $-$ be certain to enter $"0"$ wherever required. Round your answers to $1$ decimal place.$)$

$\backslash$table$[[$KEYS COMPUTERS$],[$Common$-$Size Balance Sheets$],[,$This Year,Last Year$],[$Current assets:$],[$Cash$,\%,\%$