Should the bank lend the company the funds

Assignment Help Financial Accounting

Reference no: EM133376452

Question: You have just been employed at a Junior Analyst at a bank and as your first assignment you have been asked to analyze the financial statements of a small tree cutting business which has applied for a $100,000 loan to purchase additional equipment to expand its operations.

Should the bank lend the company the funds? Support your recommendation with calculations.
What other analysis should you undertake in order to support your recommendation?

Balance Sheet	2021	2022
Current Assets
Cash	15,450	30,900
Inventory	40,350	55,000
Accounts Receivables	30,950	35,750
Prepaid Insurance	575	275
Total Current Assets	87,325	121,925

Long Lived Assets
Property Plant & Equipment	177,000	183,000
Total Assets	264,325	304,925

Liabilities & Owners' Equity
Current Liabilities
Accounts Payable	15,500	14,000
Salaries Payable	2,250	2,000
Interest Payable	525	525
Unearned Revenue	2,600	1,600
Short term notes	6,000	5,000
Total Current Liabilities	26,875	23,125
Long Term Liabilities
Notes Payable	43,000	33,000
Total Liabilities	69,875	56,125
Owner's Equity	194,450	248,800
Total Liab & Owners Equity	264,325	304,925

Income Statement	2021	2022
Sales	200,000	250,000
Cost of Goods Sold	70,000	87,500
Gross profit	130,000	162,500
Salaries & Wages	50,000	55,000
Depreciation	7,000	7,000
Insurance	5,000	5,500
Advertising Expenses	4,000	5,000
Interest Expense	2,000	2,200
Income before taxes	62,000	87,800
Income tax	15,500	21,950
Net Profit	46,500	65,850

Reference no: EM133376452

Questions Cloud

What was the article about american abstract art : What was the article about and What did you think about as you read through the article - What did the article teach you that you didn't know before

What is the firm net income, common stockholder equity : The firm had a total asset of 9.6 million at the end 2021. What is the firm's net income, common stockholder's equity, and net sales, numbers only.

How will you report this on the financial statements : Karl Publishing House (KPH) is still using a machine that has been fully depreciated. If you are the accountant of KPH, how will you report this

What is your current family structure : What is your current family structure? Are you still primarily involved in your family of origin? If your current family is different.

Should the bank lend the company the funds : Should the bank lend the company the funds? Support your recommendation with calculations. What other analysis should you undertake in order to support your

Conduct an in-depth ratio analysis of coca-cola performance : Conduct an in-depth ratio analysis of COCA-COLA performance in last five years and forecast its performance of next year using the forecasted financial

Home environment of children from lower- or working-class : It further implies, that, as a society, we should use more of our resources to address early environmental problems and disadvantages

What do you understand by the word pro?t - scarlet limited : What do you understand by the word "pro?t - Scarlet Limited has operating "pro?t" for the ?nancial year of £6,000,000 for the year ended 31 December 2018.

How would you describe your ability to listen : How would you describe your ability to listen? Considering that no one is a perfect listener, where/when do you listening skills get challenged most

User Account

All Pages