The client has the following: Cash Accounts Receivable 250,000 Inventory 250,000 Fixed Assets 475,000 Goodwill 50,000...

  

Transcribed Image Text:

The client has the following: Cash Accounts Receivable 250,000 Inventory 250,000 Fixed Assets 475,000 Goodwill 50,000 Total Assets 1,025,000 Accounts Payable 225,000 Short-term Bank Loan 200,000 Long-term Bank Loan 400,000 Total Debt 825,000 Equity 200,000 Net Income for the year 100,000 Includes: Interest -5% 30,000 EBIT 170,000 Cash flows for the year 50,000 Bank covenants: Debt to Equity Current Ratio Keep Bank Loans within collateral coverage 2.0 49 4.0 Question #3-Would you lend the company more funds? How much? Question #4 - Which two risks would you monitor regarding this company? The client has the following: Cash Accounts Receivable 250,000 Inventory 250,000 Fixed Assets 475,000 Goodwill 50,000 Total Assets 1,025,000 Accounts Payable 225,000 Short-term Bank Loan 200,000 Long-term Bank Loan 400,000 Total Debt 825,000 Equity 200,000 Net Income for the year 100,000 Includes: Interest -5% 30,000 EBIT 170,000 Cash flows for the year 50,000 Bank covenants: Debt to Equity Current Ratio Keep Bank Loans within collateral coverage 2.0 49 4.0 Question #3-Would you lend the company more funds? How much? Question #4 - Which two risks would you monitor regarding this company?

Answer rating: 100% (QA)

To determine whether to lend the company more funds and how much we need to analyze the financial position and performance of the company Considering ... View the full answer