The general manager of a medium-sized manufacturing company wants to renew the company's operating loan. In discussions with the bank's lending officer, the general manager says: 'As the accompanying financial statements show, our working capital position has improved during the past year, and we have managed to reduce operating expenses significantly.'

The partial financial statements are shown below.

1. Evaluate the general manager's comments. Incorporate appropriate ratio analysis in your discussion.
2. What additional financial information (if any) would you request from the general manager? Why?

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Current assets Cash Accounts receivable Inventories Total current assets Current liabilities Accounts payable Operating loan Total current liabilities Sales Less COGS Gross profit 2016 $ Operating expenses Profit before taxes Income taxes Net profit 50 000 250000 500 000 800000 250 000 100000 350000 2015 2016 $ 1 200 000 780000 420000 350000 70000 14000 56000 55 TITAN MANUFACTURING LTD INCOME STATEMENT FOR THE YEARS ENDED 31 DECEMBER 2016 AND 2015 200 000 100 000 400 000 700 000 200 000 100 000 300 000 2015 $ 1 500 000 900 000 600 000 400 000 200 000 40 000 160 000