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Perspective on Financial Statements Neil Poje of Nolalu, Ontario, has an oil distribution business. The business has requested a copy of the financial statements of the business for the latest year $50 000 bank loan with a local bank. Following normal practice, the bank mana Neil luas provided her with audited financial statements. In simplified form, the statements appear below. POJE FUELS INCOME STATEMENT YEAR ENDED JUNE 30, 20 $250 000 Revenues Expenses Cost of Oil Other Expenses Total Expenses Net Income $150 000 65 000 215 000 $ 35 000 POJE FUELS BALANCE SHEET JUNE 30,20 Assets Cash Accounts Receivable Inventory of Oil Other Assets Total Assets $ 5 000 14 000 100 000 70 000 $189 000 Liabilities and Equity Bank Loan Accounts Payable Total Liabilities Owner's Equity Tocal Liabilities and Equity $ 50 000 30 000 $ 80 000 109 000 $189 000 Questions 1. Why does a bank manager request financial statements? 2. In your opinion, should Neil Poje be satisfied with the net income figure! 3. Why might the bank manager be concerned about the bank loan? 4. Give an explanation for the business's being short of cash ure higher or lower? the bank's position more secure? 5. The inventory of oil is shown at $100 000. What could happen to make this is 6. What could the bank manager require (il it has not already been done) to me 7. The bank manager will probably compare these financial statements with thos 8. If you were the bank manager, what action would you take regarding this loan of previous years of what use would this be