Analyzing Financial Statement Information. The Fayette Corporation has applied to the Irving National Bank for a $100,000 loan to purchase new equipment for its manufacturing operations. As part of the loan application, the chief financial officer of Fayette submitted the following financial statement information: 

. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .2018 ...................2019 

Balance sheet Current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . ................... $ 45,000 ............$ 50,000 

Noncurrent assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152,000 ..............175,000 

Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .197,000 .................225,000 

Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22,000 ........................25,000 

Noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . .........................................75,000 .....................91,000 

Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 ..................109,000 

Income statement Operating revenues . . . . . . . . . . . . . . . . . . . . . . ...... $120,000 ..................$123,500 

Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(101,000) .....................(88,500) 

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,000 ...................$ 35,000 

Statement of cash flow Cash flow from operating activities . . . . . . . . $ 32,000 ......................$ 49,500 

Cash flow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(40,000) .....................(48,000) 

Cash flow from financing activities . . . . . . . .. . . . . . . . . . . . . . . . . .  . . . . 17,500 .......................22,000 

Change in cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 9,500 .................$ 23,500 

Required 

Analyze the financial statement information of The Fayette Corporation and indicate whether you believe that the firm’s loan application should be approved. And, if so,why?

Answer rating: 100% (QA)

Yes the company should be provided with the required loanThere may be discussion on the amount of lo... View the full answer