Argo Airlines, a privately held firm, is looking to buy additional gates at its home airport for $635,000 Argo has $200,000 in the bank but that money may not be spent as it is used to pay salaries, suppliers, and equipment Argo asked its bank for a loan but the bank refused saying that Argo's interest-bearing debt to equity was too high at 3.1 The bank said that Argo needed to lower that ratio below 2.3 in order to get the loan Separately, SkyBlue Airlines has approached Argo to see if Argo will buy it.

Argos CFO hired you to help with the following task:

1. Argo's forecast balance sheet has been included in the Excel file, so you need do nothing to it However, the CFO has asked you to consolidate the two balance sheets - the Argo one given to you and the SkyBlue one that you calculated. Once these two are consolidated, you are asked to calculate three debt ratios, as listed in the file.

IMPORTANT: SHOW FORMULAS USED TO CALCULATE

E 1 2 Balance Sheet 3 Cash 4 Notes and Acc. Rec. 5 Inventory 6 Prepaid 7 Current Assets 8 Other 9 Total Assets B Actual 2018 240 7,013 5,588 192 13,033 3,325 16,358 D Projected 2019 2020 250 250 8,385 9,998 6,630 7,905 195 232 15,460 18,385 3,830 4,393 19,290 22,778 2021 Notes 250 12,040 9.520 280 22.090 5,105 27,195 10 6,070 3,057 433 1,477 11,037 2,458 7,586 3,705 450 1,712 13,453 2,008 9,321 4,417 450 1,994 16,182 1,558 11.404 5,320 450 2.350 19,524 1.108 11 Bank Loan 12 Payables 13 CPLTD 14 Other 15 Current Liabilities 16 LTD 17 18 Equity 19 Total Liabilities & Equity 20 21 Ratios: 22 Bank Loan to Receivables 23 Liabilities / Equity 24 Debt / Equity 2,863 16,358 3,829 19,290 5,038 22,778 6,563 27,195 0.9 4.7 3.1 0.9 4.0 2.6 0.9 3.5 2.2 0.9 3.1 2.0