Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Chapter 18 Financial Statements Analysis And please can you do all the questions thanks i appreciate it Bu 102 FINAL PROJECT Chapter 18 Financial Statement

Chapter 18 Financial Statements Analysis

And please can you do all the questions thanks i appreciate it

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Bu 102 FINAL PROJECT Chapter 18 Financial Statement Analysis You are a commercial lending officer for a local bank. Lester Corporation has come to the bank requesting a $150,000 short term loan to meet operating needs. Lester has good, but not excellent credit and has been in business for a number of years, and has a history of profitabliity, although not excessively profitable in recent years. The loan would be for one year at 9%. If the bank made the loan, the bank would earn $13,500 in interest income in addition to lending fees of approximately $3,000. At the end of the year, Lester is expected to repay the loan in full. Lester Corporation has presented a copy of the current year's income statement,cash flow and a comparative balance sheet for 2021 and 2020 . Other information is provided along with industry averages. REQUIRED: You are to: a. Compute all ratios for Lester listed in the industry averages. b. Compare each ratio to industry averages and rate on the following scale Below average Average Above average c. Provide an overal comment of the following on Lester's: Lester Corporation Balance Sheets For the Years Ended December 21, 2021 and 2020 Liabilities and Stockholder Equity \begin{tabular}{|l|r|r} \hline Current liabilities & 400,000 & 550,000 \\ \hline Mortgage payable & 425,000 & 500,000 \\ \hline Stockholder equity & 1,310,000 & 1,150,000 \\ \cline { 2 - 3 } & & \\ \hline Total liabilities \& S/E & 2,135,000 & 2,200,000 \\ \hline \hline \end{tabular} Lester Corporation Income Statement Cash Flow Statement For the Year Ended December 31,2021 Sales Revenue: Net Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Net Income before int. and taxes Interest expense Net Income before tax Income tax expense Net incorne Other Information \begin{tabular}{|l|} \hline Number of shares outstanding: \\ \hline \end{tabular} Ratio + Number of shares outstanding: Stock price $52 per share Industry Averages: Liquidity Current ratio: Accounts receivable turnover 3.25:1 A verage collection period 10 times per year Inventory turnover 36 days Days in inventory 4 times per year 90 days Profitablity Gross profit \% 1617% Profit margin Return on average stockholder equity Earnings per share $2.50 to 2.75 per share Price earnings ratio 12 times earnings 5 Solvency Debt to asset ratio a. Compute: b. Compare Rating 1 Liquidity Computations Above Average Average average 2 Current ratio for 2021 3 A ccounts receivable turnover 4 Average collection period 5 Inventory turnover Days in inventory 7 8 Profitablity 9 Gross profit\% Profit Margin Return on avernge stockholder equity Earnings per share Price earnings ratio Solvency Debt to asset ratio for 2021 c. Comment 1. Liquidity 2. Profitability 3. Solvency d. Decide - Lend? Yes/No, Why

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Lost Continent The BBCs Europe Editor On Europes Darkest Hour Since World War Two

Authors: Gavin Hewitt

1st Edition

1444764829, 9781444764826

More Books

Students also viewed these Accounting questions

Question

What is an incident response plan (IR plan)?

Answered: 1 week ago

Question

=+Identify the key components of a strategic plan

Answered: 1 week ago