LOAN TO BOOK PUBLISHER. Suppose that RSM Publishing Company, a children’s book publi...

LOAN TO BOOK PUBLISHER. Suppose that RSM Publishing Company, a children’s book publisher, has approached your bank and wants to borrow $250,000 in working capital. The firm provides you with the following balance sheet and income statement data:

4. Suppose that the typical publishing firm in this industry has just one-half the amount of equity that RSM has. How will this affect key industry ratios and the working capital needs estimated by this procedure, in general?