You are a commercial loan officer at a large bank. The date is October 1st. The Halloween
Question:
You are a commercial loan officer at a large bank. The date is October 1st. The Halloween Costume and Gear Store in Regina has reached out to you with a credit request. The company executive brought in a balance sheet and a list of income statement accounts. The company's year-end is September 30.
Halloween Costume and Supply Store | ||||||
Balance | ||||||
As of September 30, 2020 | ||||||
ASSETS | LIABILITY AND EQUALITY | |||||
in advance | $58,228 | Accounts payable | 306.080 $ | |||
Accounts receivable | 368.280 $ | Fees Payable | $46,480 | |||
Inventory | $142,480 | Taxes Payable | 84.000 $ | |||
Total current assets | 568.988 $ | Total current responsibilities | 436.560 $ | |||
Store Furniture | 940.000 $ | long-term debt | 184.000 $ | |||
accumulated debt | (440.000 $) | Joint capital | 448.428 $ | |||
TOTAL ASSETS | 1.068.988 $ | TOTAL LIABILITY & EQUITY | 1.068.988 $ | |||
INCOME STATEMENT ACCOUNTS | ||||||
Salary expenses | 182.616 $ | |||||
cost of goods sold | 1.540.740 $ | |||||
depreciation expense | $69,322 | |||||
Sales revenues | 2.134.567 $ | |||||
office expenses | $63,542 | |||||
selling expense | $61,728 | |||||
Income tax rate | %15 |
Prepare a report for your manager that includes:
- Prepare an income statement in the appropriate format. Is this a high or low risk loan?
- Provide a financial analysis on the balance sheet (ratios)
- Discuss the non-financial factors you think are important
- Suggest whether the loan will be granted and why.
Understanding Financial Accounting
ISBN: 978-1118849385
1st Canadian Edition
Authors: Christopher Burnley, Robert Hoskin, Maureen Fizzell, Donald