Debt analysis Springfield Bank is evaluating Creek Enterprises, which has requested a $4,000,000 loan, to assess the firm's financial leverage and financial risk. On the basis of the debt ratios for Creek, along with the industry average and Creek's recent financial statements (following), evaluate and recommend appropriate action on the loan request.

2 de 2 Debt analysis Springfield Bank is evaluating Creek Enterprives, which has requested a \$4,000,000 bas, to anest the firm' Y financial leverage and financial riak. On the basis of the deter ratios for Creek, along with the industry average and Creek's recent financial sateraents (followingh, eraluate and recommend appropriate action on the loan reques. \begin{tabular}{|c|c|} \hline \\ \hline Sules revenue & $30,000,000 \\ \hline Len: Cont of goods wold & 21,000000 \\ \hline Grow peofin & 59,000,000 \\ \hline \multicolumn{2}{|l|}{ Les: Operating expemses } \\ \hline Selling expense & 5 3,000,000 \\ \hline Cencral and adminierative expenues & 1,800,000 \\ \hline Lease expense & 200,000 \\ \hline Deprrciation expence & 1,000,000 \\ \hline Total operating eapense & $6,000,000 \\ \hline Operating peofit & 53,000,000 \\ \hline Les: Interest expense & 1,000,000 \\ \hline Net peofis before tane & 52,000,000 \\ \hline Lese Taxes (rate =21% ) & 420,000 \\ \hline Net profits after taxn & $1,5180,000 \\ \hline Len: Prefferred uock dividends & 100,000 \\ \hline Eaming avalable foe common stockholden & 51,480,000 \\ \hline \end{tabular} 127 \begin{tabular}{|c|c|c|c|} \hline \\ \hline \multicolumn{2}{|l|}{ Anem } & \\ \hline Cah & & Aevoum papats & \\ \hline & Moxpono & Nien poratle & soseson \\ \hline & itsoocyon & Aesnaly & manes. \\ \hline Inmonotion & 7,500000 & Taed numen laklides & \\ \hline Tacal darnat anes & Hstongon & & \\ \hline Lind and bulline. & $11,000,000 & & \\ \hline stachinery est equijment & 20,500000 & Pontrind and asooe & \\ \hline haminer and fishores & s,ooginoo & sham, H divilend! & 12,900000 \\ \hline & 133,900,000 & & \\ \hline Ine Aorinaland dephociarioe & 11,000100 & dane ot $ par? & 5.000,000 \\ \hline Nert find aners & 5450000 & & \\ \hline Toul anen & 51000009 & & 4,000,000 \\ \hline & & Reained arming & 200000 \\ \hline & & Toul wakholden' tepaity & 313,5000 \\ \hline & & \begin{tabular}{l} Toul lablities and \\ nodveliben' equify \end{tabular} & 1500000 \\ \hline \end{tabular}