Baker & Co has applied for a loan from the Trust Us Bank in order to invest in several potential opportunities. In order to evaluate the firm as a potential debtor, the bank would like to compare Baker & Co, to the industry. The following are the financial statements given to Trust Us Bank Balance Sheet 2019 2018 Aurt 760 Accable tary Current Income Statement 2019 2018 Sales (100% credit) 1,330 1,100 Cost of goods sold 600 Gross profit 570 500 Operating expenses 30 20 Depreciation 200 160 Net operating income 320 57 64 Net income before taxes 283 256 Taxes 96 87 270 305 290 275 580 500 1,140 1,180 1.940 1,700 600 500 1,340 1,200 2,400 2,380 Punt and equipment 340 Interest expense Net plant and equipment Total Net income 187 169 Lab and Owners' Equity kettust payable Note payable Current abilities londi 200 150 0 125 200 275 500 500 Owners' Equity Common stock din capital 305 165 775 775 Balance Sheet 2019 2018 Anet Per kurv Current Fantand up Lap tort plant and equipment Total assets 270 305 290 275 580 600 1,140 1.180 1.540 1,700 600 500 1,340 1.200 Income Statement 2019 2018 Sales (100% credit) 1,330 1,100 Cost of goods sold 760 600 Gross profit 570 500 Operating expenses 30 20 Depreciation 200 160 Net operating income 340 320 57 64 283 256 96 87 Interest expense Net income before taxes 2,480 2,380 Tures Net income 187 List, and Owners' Equity Accountable Notes poble Current abilities Bonde 169 200 150 125 275 0 200 500 500 Owners Equity Commonstad 305 165 Pupul 775 775 Peterp 700665 Total Owser quity 1.780 1605 Yotal band Owners Equity 2,400 2,380 Part 18 paty 2480 2380 Part 1 (8 marks). Compute the ratios in shaded areas in the table below. Format all Cications to match the industry average show, Part 2 (6 marks). In order to evaluate the firm, the bank would like to compare Baker & Co to the industry. Discuss the strengths and weaknesses of Baker & Co. from this perspective at least 3 strengths and 3 weaknesses, induding an explanation for why you consider them strengths and weaknesses). Part 3 (2 maris). Should the bark make the loan? Why or why not? = S = 11 00 a Lato (Recom Industry Page Formula 2019 2018 Average Contato Current assets / Current liabilities 5 Current assets inventoryl/ Current liabilities Page Cost of goods sold/Inventory Mas colection period dan 22 Accounts recevable/Average daily sales Total abilities/Total assets 90 turto Operating profit/interest Expense Net sales/Total assets 0.33 71 Operating protein Net sales/Netplant, property & equipment Operating profit/Net sales Netpro 0.75 Return total asset Net earnings/Net sales Net earnings/Total assets 20.00% 12.00% 9.00% DELL ap F BIVA E + Lato (Recom lection period day Dette Accounts receivable/Average daily sales Total abilities/Total assets 90 The interest earned 0.33 Tsalurower Operating profit/interest expense Netbalet/Totalets 7 Ford turnover Operating profit margin 0.75 Nauru Net sales/Netplant, property & equipment Operating profit/Net sales Net earings/er sales Net earnings/Total assets Kurs on tott 20.00% 12.00% Net earning stockholders equity 9.00% 1 10.43% Strengths and weaknesses of Baker & Co. (discuss at least 3 strengths and 3 weaknesses, including an explanation for why you consider them strengths and weaknesses) Should the bank make the loan? Why or why not
