You are the loan officer at Corner Street Community Bank. You received a loan application from T.P. Jarmon Company. The first picture is for financial statements that belong to the most recent fiscal year(s). The second picture provides financial ratios for the industry. Analyze these financial statements in terms of liquidity, profitability and solvency. Give an opinion on whether you would approve the loan application or not in great detail.

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T. P. Jarmon Company, Balance Sheet for 12/31/2012 and 12/31/2013 Cash Marketable securities Accounts receivable Inventory Prepaid rent Total current assets Net plant and equipment Total assets Accounts payable Notes payable Accruals Total current liabilities Long-term debt Common stockholders equity Total liabilities and equity 2012 $ 15,000 6,000 42,000 51,000 1,200 $115,200 286,000 $401,200 $ 48,000 15,000 6,000 $ 69,000 160,000 172,200 $401,200 T. P. Jarmon Company, Income Statement for the Year Ended 12/31/2013 Sales (all credit) Less cost of goods sold Gross profit Less operating and interest expenses General and administrative Interest Depreciation Total Earnings before taxes Less taxes Net income available to common stockholders Less cash dividends Change in retained earnings $30,000 10,000 30,000 2013 $ 14,000 6,200 33,000 84,000 1,100 $138,300 270,000 $408,300 $ 57,000 13,000 5,000 $ 75,000 150,000 183,300 $408,300 $600,000 460,000 $140,000 70,000 $70,000 27,100 $ 42,900 31,800 $ 11,100 RATIO Current ratio Acid-test ratio Debt ratio Times interest earned Average collection period Inventory turnover (based on cost of goods sold) Return on common equity Operating return on assets Operating profit margin Total asset turnover Fixed asset turnover NORM 1.8 0.9 0.5 10.0 20.0 7.0 12.0% 16.8% 14.0% 1.20 1.80 T. P. Jarmon Company, Balance Sheet for 12/31/2012 and 12/31/2013 Cash Marketable securities Accounts receivable Inventory Prepaid rent Total current assets Net plant and equipment Total assets Accounts payable Notes payable Accruals Total current liabilities Long-term debt Common stockholders equity Total liabilities and equity 2012 $ 15,000 6,000 42,000 51,000 1,200 $115,200 286,000 $401,200 $ 48,000 15,000 6,000 $ 69,000 160,000 172,200 $401,200 T. P. Jarmon Company, Income Statement for the Year Ended 12/31/2013 Sales (all credit) Less cost of goods sold Gross profit Less operating and interest expenses General and administrative Interest Depreciation Total Earnings before taxes Less taxes Net income available to common stockholders Less cash dividends Change in retained earnings $30,000 10,000 30,000 2013 $ 14,000 6,200 33,000 84,000 1,100 $138,300 270,000 $408,300 $ 57,000 13,000 5,000 $ 75,000 150,000 183,300 $408,300 $600,000 460,000 $140,000 70,000 $70,000 27,100 $ 42,900 31,800 $ 11,100 RATIO Current ratio Acid-test ratio Debt ratio Times interest earned Average collection period Inventory turnover (based on cost of goods sold) Return on common equity Operating return on assets Operating profit margin Total asset turnover Fixed asset turnover NORM 1.8 0.9 0.5 10.0 20.0 7.0 12.0% 16.8% 14.0% 1.20 1.80

Answer rating: 100% (QA)

following are the financial ratios for TP Jarmon company 2012 2013 current ratiocurrent assetscurrent liabilities 167 18 acid test ratio CAstock CL 09... View the full answer