Question

The 2014 financial statements for Rand and Tand companies are summarized below:
These two companies are in the same line of business and in the same province but in different cities. Each company has been in operation for about 10 years. Rand Company is audited by a national accounting firm; Tand Company is audited by a local accounting firm. Both companies received an unqualified opinion (i. e., the independent auditors found nothing wrong) on the financial statements. Rand Company wants to borrow $ 75,000 cash, and Tand Company needs $ 30,000. The loans will be for a two- year period and are needed for working capital purposes.
Required:
1. Complete a schedule that reflects a ratio analysis of each company. Compute the ratios discussed in the chapter.
2. Assume that you work in the loans department of a local bank. You have been asked to analyze the situation and recommend which loan is preferable. Based on the data given, your analysis prepared in (1), and any other information, give your choice and provide a supporting explanation.


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  • CreatedAugust 04, 2015
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