Provide three ratios that would either encourage or discourage lenders considering loaning $100,000 for a 10-year term at 8% interest.

 

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Milavec Company Income Statement and Statement of Retained Earnings For the Years Ending Year 5 1,600,000 $ Year 4 900,000 $ Year 3 800,000 Sales Cost of Goods Sold Beginning Inventory Purchases 70,000 $ 1,078,000 $ 1,148,000 $ 43,000 $ 637,000 $ 680,000 $ 40,000 483,000 Goods available for sale Ending Inventory Cost of Goods Sold 523,000 60,000 $ 1,088,000 $ 70,000 $ 610,000 $ 290,000 $ 248,000 $ 42,000 $ 17,000 $ 25,000 $ 43,000 480,000 Gross Margin 320,000 512,000 $ 480,000 $ 32,000 $ 12,800 $ 19,200 $ Operating Expenses 280,000 Income before taxes 40,000 18,000 22,000 130,000 Income taxes Net Income Plus: Beg bal Retained Earnings 162,000 $ 137,000 $ Less: Dividends 6,000 $ 15,000 Ending Balance Retained Earnings 175,200 $ 162,000 $ 137,000 Milavec Company Balance Sheet As of December 31 Year 5 Year 4 Year 3 Assets Cash 36,200 $ 20,000 $ 17,000 Marketable Securities 20,000 $ 20,000 $ 22,000 Notes Receivable 4,000 $ 3,000 Accounts Receivable 65,000 $ 50,000 $ 56,000 Merchandise Inventory Prepaid Expenses Property Plant and Equipment (net) 60,000 $ 70,000 $ 4,000 $ 340,000 $ 508,000 $ 43,000 4,000 340,000 $ 521,200 $ 310,000 Total Assets 455,000 Liabilities and Stockholder's Equity Accounts Payable Salaries Payable 40,000 $ 40,000 $ 38,000 2,000 $ 4,000 $ 2,000 $ 3,000 Taxes Payable 4,000 $ 2,000 100,000 $ 50,000 $ 150,000 $ 175,200 $ 521,200 $ Bonds Payable, 8% 100,000 $ 50,000 $ 150,000 $ 162,000 $ 508,000 $ 100,000 Preferred Stock, 6%, $100 par, cumulative $ 50,000 Common Stock, $10 par Retained Earnings Total Liabilities and Stockholders' Equity 125,000 137,000 455,000 %24 SSS SSSS Milavec Company Income Statement and Statement of Retained Earnings For the Years Ending Year 5 1,600,000 $ Year 4 900,000 $ Year 3 800,000 Sales Cost of Goods Sold Beginning Inventory Purchases 70,000 $ 1,078,000 $ 1,148,000 $ 43,000 $ 637,000 $ 680,000 $ 40,000 483,000 Goods available for sale Ending Inventory Cost of Goods Sold 523,000 60,000 $ 1,088,000 $ 70,000 $ 610,000 $ 290,000 $ 248,000 $ 42,000 $ 17,000 $ 25,000 $ 43,000 480,000 Gross Margin 320,000 512,000 $ 480,000 $ 32,000 $ 12,800 $ 19,200 $ Operating Expenses 280,000 Income before taxes 40,000 18,000 22,000 130,000 Income taxes Net Income Plus: Beg bal Retained Earnings 162,000 $ 137,000 $ Less: Dividends 6,000 $ 15,000 Ending Balance Retained Earnings 175,200 $ 162,000 $ 137,000 Milavec Company Balance Sheet As of December 31 Year 5 Year 4 Year 3 Assets Cash 36,200 $ 20,000 $ 17,000 Marketable Securities 20,000 $ 20,000 $ 22,000 Notes Receivable 4,000 $ 3,000 Accounts Receivable 65,000 $ 50,000 $ 56,000 Merchandise Inventory Prepaid Expenses Property Plant and Equipment (net) 60,000 $ 70,000 $ 4,000 $ 340,000 $ 508,000 $ 43,000 4,000 340,000 $ 521,200 $ 310,000 Total Assets 455,000 Liabilities and Stockholder's Equity Accounts Payable Salaries Payable 40,000 $ 40,000 $ 38,000 2,000 $ 4,000 $ 2,000 $ 3,000 Taxes Payable 4,000 $ 2,000 100,000 $ 50,000 $ 150,000 $ 175,200 $ 521,200 $ Bonds Payable, 8% 100,000 $ 50,000 $ 150,000 $ 162,000 $ 508,000 $ 100,000 Preferred Stock, 6%, $100 par, cumulative $ 50,000 Common Stock, $10 par Retained Earnings Total Liabilities and Stockholders' Equity 125,000 137,000 455,000 %24 SSS SSSS

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Ratios lenders will consider before lending a loan of 100000 for a 10year term at 8 int... View the full answer