SM Publishing Co. has approached Bank of Detroit and wants to borrow $250,000 in working capital. The firm provides the bank with the following financial statements. (10 points) Sales: $4,622,800
COGs: $3,504,100
Operating expense: $893,000
Purchase: $3,116,000
Assets Liability & Equity
Cash 50,000 A/P 166,000
A/R 375,000 Accrued Expense 37,000
Inventory 510,000 Notes payable (due in 18 months) 75,000
Fixed Asset 925,000 Current maturity of LT debt 25,000
Total Asset 1,860,000 LongTerm Debt 475,000
Equity 1,082,000
Total Liability&Equity 1,860,000
1). What’s the firm’s gross profit margin? Show your calculations.
2). What’s the firm’s net working capital? Show your calculations .
3). What’s the firm’s working capital loan needs? Show your calculations .