Receivable Financing or Inventory Financing.
Receivable Financing or Inventory Financing. Large Corporation has liquidity problems. Most of its sales are made to small customer accounts. Relevant balance sheet data for 20X1 are:
ASSETS | ||
Current assets | ||
Cash | $ 35,000 | |
Receivables | 410,000 | |
Inventory (primarily consisting of finished goods and raw materials) | 360,00 | |
Total current assets | $ 805,000 | |
Fixed assets | 600,000 | |
Total assets | $1,405,000 |
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities | ||
Accounts payable | $350,000 | |
Loans payable | 320,000 | |
Accrued expenses | 56,000 | |
Total current liabilities | $ 726,000 | |
Bonds payable | 225,000 | |
Total liabilities | $ 951,000 | |
Stockholders’ equity | ||
Common stock | $300,000 | |
Retained earnings | ||
Total stockholders’ equity | 154,000 | 454,000 |
Total liabilities and | ||
stockholders’ equity | $1,405,000 |
Relevant income statement data are:
Sales | $2,400,000 |
Net income | $480,000 |
Given the balance sheet and income statement data: (a) Is receivable financing likely? (b)Is inventory financing likely?
11 years ago
