gnment Part 1 of 13 (Financial statement analysis) The T. P. Jarmon Company manufactures and sells a line of exclusive sportswear. The firm's sales were $600,100 for the year just ended, and its total assets exceeded $500,000 The company was started by Mr. Jarmon just 10 years ago and has been profitable every year since its inception. The chief financial officer for the firm, Brent Vehlim, has decided to seek a line of credit from the fem's bank totaling $81.000. In the past, the company has relied on its suppliers to finance a large part of its needs for inventory. However, in recent months sight money conditions have led the firm's suppliers to offer sizable cash discounts to speed up paymenes for purchases. Mr. Vehlim wants to use the line of credit to supplant a large portion of the firm's payables during the summer, which is the firm's peak seasonal The Sem's two most recent balance sheets were presented to the bank in support of its loan request. In addition, the firm's income statement for the year just ended was provided. These statements are found in the following tables: Jan Fama, associate credit analyst for the Merchants National Bank of Midland, Michigan, was assigned the task of analyzing Jarmon's loan request sales period Calculate the following financial ratios for 2012 b. Which of the ratios calculated in pan (a) do you think should be most crucial in determining whether the bank should extend the line of credit? c. Use the information provided by the financial ratios and industry-noem ratios to decide if you would support making the loan. Discuss the basis for your recommendation a Calculate the following financial ratios for 2013 TP. Jamon's (Round to two decimal places.) (Financial stateme The company was f firm's bank totaling offer sizable cash d sales period The firm's two most following tables: a. Calculate the fo b. Which of the tat e. Use the informa a. Calculate the fo TP. Jarmon's curre Data table Marketable securities Accounts receivable Inventory Prepaid rent Total current assets Net plant and equipment Total assets Accounts payable Notes payable T. P. Jarmon Company Balance Sheets 2012 2013 Cash $14,900 6,010 $13,900 6,190 41.900 32,900 51.100 83,900 1.200 1,100 $115.110 $137,990 285,900 270,100 $401.010 $408.090 2012 2013 Accruals $48,000 15.100 6,000 $57,000 12.900 5.000 Total current abilities $69.100 $74,900 Long-term debt 160.000 149,900 Common stockholders' equity 171.910 183.290 Total liabilities and owners equity $401.010 $408.090 e this View an example Get me Print Done rm, Brent Vehlim, has decided to seek a line a months tight money conditions have led the t ayables during the summer, which is the firm's year just ended was provided. These stateme Jarmon's loan request. r your recommendation Clear all The company was firm's bank totaling offer sizable cash d sales period The firm's two most following tables a. Calculate the fol b. Which of the ras c. Use the informa (Click on the icon in order to copy its contents into a spreadsheet.)) T. P. Jarmon Company Income Statement for 2013 Sales (all credit) Less: Cost of goods sold Gross profit Less: Operating and interest expenses rm, Brent Vehlim, has decided to seek a line months tight money conditions have led the ayables during the summer, which is the firm year just ended was provided. These stater Jarmon's loan request. $600,100 (459,900) $140,200 your recommendation. General and administrative $30,000) Interest a. Calculate the fo T. P Jarmon's cum Total Depreciation (10,100) (29,900) $(70,000) Earnings before taxes $70.200 Less: Taxes (27,200) Net income available to common stockholders $43,000 Less: Cash dividends (31,900) Change in retained earnings $11.100 (Click on the icon in order to copy its contents into a spreadsheet) xample Get more-mep Print Done Ratio Norms 1.80 ment for the year just e k of analyzing Jarmon's ole cash discounts to s od. s two most recent bala tables: Data Jan Fan Current ratio ulate the following finan ch of the ratios calculate the information provided Acid-test ratio Debt ratio 0.90 50.0% Times interest earned 10.00 Average collection period 20.0 Inventory turnover (based on cost of goods sold) 7.00 Return on equity 12.0% Operating profit margin culate the following finan armon's current ratio is Total asset turnover Fixed asset turnover (Click on the icon in order to copy its contents into a spreadsheet.) Operating return on assets 16.8% 14.0% 1.20 1.80 Print Done of credit? the basis for your reco Ratio Norms 1.80 of analyzing Jarmon's loan request. offer szab sales period The firm's two most recent bala following tables: Jan Fan a Calculate the following finan b. Which of the ratios calculate c. Use the information provided Current ratio Acid-test ratio 0.90 Debt ratio 50.0% Times interest eamed 10.00 Average collection periodi 20.0 Inventory turnover (based on cost of goods sold) 7.00 Return on equity 12.0% a. Calculate the following finan Opening return on assets 16.8% Operating profit margin 14.0% 1. P. Jarmon's current ratio is Total asset turnover 1.20 Fixed asset turnover i (Click on the icon in order to copy its contents into a spreadsheet) 1.80 Print Done of credit? the basis for your recommendation.