Problem: Thor CompanyGunnar CompanyBalance sheet Cash35,00054,000Accounts receivable, net77,0006,000Inventory The 2019 financial statements for Thor and Gunnar Companies are summarized here (in dollars):                                          154,000                                                                                                                                                                                         30,000 Property and equipment, net 770,000 192,000 Other assets 196,000 68,400 Total assets 1,232,000 350,400 Current liabilities 168,000 18,000 Long-term debt (12% interest rate) 266,000 66,000 Capital stock ($20 par) 672,000 252,000 Additional Paid-in Capital 70,000 4,800 Retained earnings 56,000 9,600 Total liabilities and stockholders' equity 1,232,000 350,400 Income statement Sales revenue 1,120,000 336,000 Cost of goods sold (672,000) (180,000) Other expenses (336,000) (114,000) Net income 112,000 42,000 Selected Data from 2018 Statements Accounts receivable, net 65,800 13,200 Inventory 133,000 45,600 Property and equipment, net 770,000 192,000 Long-term Debt (12% interest rate) 266,000 66,000 Total stockholders' equity 798,000 266,400 Other data Per share price at end of 2019 13

Problem: Thor CompanyGunnar CompanyBalance sheet Cash35,00054,000Accounts receivable, net77,0006,000Inventory The 2019 financial statements for Thor and Gunnar Companies are summarized here (in dollars):                                          154,000                                                                                                                                                                                         30,000 Property and equipment, net

770,000

192,000

Other assets

196,000

68,400

Total assets

1,232,000

350,400 Current liabilities 168,000 18,000 Long-term debt (12% interest rate) 266,000 66,000 Capital stock ($20 par) 672,000 252,000 Additional Paid-in Capital 70,000 4,800 Retained earnings 56,000 9,600 Total liabilities and stockholders' equity

1,232,000

350,400 Income statement

Sales revenue

1,120,000

336,000

Cost of goods sold

(672,000)

(180,000)

Other expenses

(336,000)

(114,000)

Net income

112,000

42,000

Selected Data from 2018 Statements

Accounts receivable, net

65,800

13,200

Inventory

133,000

45,600

Property and equipment, net

770,000

192,000

Long-term Debt (12% interest rate)

266,000

66,000

Total stockholders' equity

798,000

266,400

Other data

Per share price at end of 2019

13.20

19.60

These two companies are in the same business and state but different cities. One-half of Thor's sales and one quarter of Gunnar's sales are on credit. Each company has been in operation for about 10 years. Both companies received an unqualified audit opinion on the financial statements. Thor Company wants to borrow $105,000, and Gunnar Company is asking for $36,000. The loans will be for a two-year period. Neither company issued stock in 2019. Assume the end-of-year total assets and net property and equipment balances approximate the year's average.

Required:

1.      Calculate the for which sufficient information is available (minimum of 8-10 financial ratios based on the lecture/PPT). Round all calculations to two decimal places.

2.      Assume that you work in the loan department of a local bank. You have been asked to analyze the situation and recommend which loan is preferable. Based on the data given, your analysis prepared in requirement 1, and any other information, give your choice and the supporting explanation.