1 Equipment is the best source of collateral for a company [highest loan value]: 2 The debt to equity ratio is a positive covenant ina bank loan. 3 Working capital policy changes generate the most cash fora company. 4 Bank loans can he seemed or not secured depending on the company nancial position. 5 Match term funding is used when long term permanent assets are funded by shorttenn bank loans Question ill - Financing analysis The client has the following: Answer the following. [ash - A How much good collateral does the company have? Accounts Receivable 250000 [ignore existing debt iorthls calculationl Inventory 250,000 Fitted Assets 4?5J000 Goodwill 50,000 Total Assets 1,025,000 Accounts Payable 225000 B How much nancing would a banker extend given Short-term Bank Loan 200,000 the company's collateral [show calculation} Long-term Bank Loan 400000 Total Debt 825,000 Equity 200000 Net Income for the year 100,000 Includes: interest - 5% 30,000 EBIT 11-0000 C How would you assess the company's debt situation? Cash flows for the year 50,000 Bank covenants: Debt to Equity 4.0 Current Ratio 2.0 Keep Bank Loans within collateral coverage Question #3 - Would you lend the company more funds? How much? Yes or No - Why or Why Not- How Much - Zero or? Question iitl - Which two risks would you monitor regarding this company