I-08.04 Problem

I-08.04 Problem - I-08.04 Form a six-member team, evaluate...

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I-08.04 Form a six-member team, evaluate the following fact situation, and complete the indicated requirements. Lynne Pastor is chief financial officer for Lots of Advertising. The company has received an exclusive contract to distribute a unique parking lot striping machine that imprints advertising messages in parking lot stripes. Lots of Advertising is planning for rapid growth and needs to raise expansion capital. Lynne has identified a long-term source of financing on very favorable terms, but the following stipulations must be met: Gross Profit Percentage for the first year Must exceed 50% Inventory Turnover for the first year (for this calculation assume year-end inventory is the "average" level) Must exceed 1.4 Current ratio at year's end Must exceed 3:1 The financing agreement requires that Lots of Advertising use FIFO, LIFO, or the weighted- average cost method, applied on a periodic basis. It is anticipated that year-end current assets, excluding inventory will total $5,500,000. Current liabilities will be $4,750,000.
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I-08.04 Problem - I-08.04 Form a six-member team, evaluate...

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