Suppose you are a banker, and the controller of a small business asks you for a short-term \(\$ 10000\) loan due in 120 days. Interest on the loan would be 12 per cent, due when the loan is paid back. To support his request, he gives you the following information from his business' cash budget for the next quarter.

Required:
a What is your first reaction?
b Before making your decision, what else would you like to know about this business? Can any of what you would like to know be found in any of the business' other budgets or financial statements? What other budgets or statements would you like the owner to provide for you? What information would you hope to get from each of these budgets or statements?
c What other information would help you make your decision?
d Can you think of any circumstances in which it would be a good idea to loan this business \(\$ 10000\) ?
e Depending on the information you are able to get, what other alternatives are there to loaning or not loaning this business \(\$ 10000\) ?

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Cash flow from operations: Cash receipts from sales Cash payments for Purchases Selling expenses General and administrative expenses Total payments Net cash inflow (outflow) from operations January $20 000 $15.000 3 300 1650 $19 950 $ 50 February $14400 $10 800 3.300 650 $14750 $ (350) March $13 600 $10 200 3300 650 $14150 $ (550) Quarter $48 000 $36 000 9 900 2950 $48 850 $ (850)