*******I only need help with the Memo********

Scenario: You are required to conduct an analysis of specific financial data of Bob Smith, Inc. Bob is an existing bank customer. When the loan to Bob was originally made in 2016, the bank required Bob to increase the YE 2016 cash balance to at least $70,000 to qualify for the interest rate that the bank used for the original loan. This cash balance was required for the bank to make its target yield on the loan created. The Cash Flow Statement and Balance Sheet show an actual YE 2017 cash balance of less than $34,000. You will need to complete the 2017 Cash Flow Statement. In addition, you will also prepare the Common Sized Financial Statements for the 2 years shown. This information allows you to substantiate the 2018 loan denial or renewal request. You are acting as the loan committee of the bank and you will address an internal memo to the loan officer in charge of this loan facility giving the committees decision on whether to approve the loan as is, renew the loan with modifications, or deny the loan request. Be sure you move away from definitions to analysis. Additionally, you do not need to give definitions of balance sheet accounts.

XYZ Bank told Bob to increase cash to $70,000 from 2016 to 2017. But cash increased from $16,566 in 2016 to just $33,411 in 2017, well short of $70,000. In this assignment, you will review six select changes in the Balance Sheet accounts, highlighted in yellow, to better understand how these individual account changes impact overall cash flows. 2017 and 2016 Comparative ASSETS 2017 2016 Needed to foot the Cash Flow Statement all the way back to 2017 cash position. Net Income $3,155,848 Depreciation 212,366 Dividends Paid 2,966,412 225,700 Tax Items 1 to 6. Note the value effect on Cash. Did the change in balances from one year to the next create (+) or 'use' (-) cash? Note the accounting or finance issue related to each of the six accounts reviewed. Cash $ $ 33,411 $ $ 16,566 Accounts Receivable $ 260,205 $ 318,768 Inventory S 423,819 $ 352,740 71,079 Other current assets Total Current Assets $ S 41.251 758.686 $ $ 29.912 S 717,986 S (11,339) (40.700) Plant Property and Equipment 1.512,625 403,220 109,455 $ Goodwill and other assets Total Assets S S 382.145 2.653.506 412.565 S 2.533.771 30,420 (119.735 LIABILITIES AND EQUITY Accounts Pawable $ 378,236 332004 46,232 Wages Pawable Accrued income taxes Total Current Liabilities $ SS 14.482 7.862 21.125 $ 16,815 S 413.848 $ $$ 356,681 S 6,623 4.310 57,167 Long-Term Debt: Bank Notes 679,981 79.3.SIS (113,534) S Total Liabilities Total Common Equity Total Liabilities and Equity 1,093.829 1.559,677 2.652.506 S 1,150,196 $ S 1,383,575 S 2.533.771 (56,367) ) 176,102 119.735 S MT80 Unit 4 Assignment 2 CC&Rs for Bob Smith, Inc. During the original loan, the bank included, as part of the loan documentation, a document called Covenants, Conditions & Restrictions (CC&Rs), which the company had to comply with to maintain its credit facility with the bank. The major conditions of this included: 1. The company will maintain at least $70,000 in their DDA (noninterest bearing checking) at all times as compensating balances against their loan. 2. The company will maintain a current ratio of at least 2:1. 3. The company will maintain a quick ratio of at least 1.5:1. 4. The company will not increase officer salaries by more than 5% while the loan is outstanding 5. The company will not pay bonuses to officers without the bank's explicit approval. Teams will consider compliance with the loan's CC&Rs as part of their loan approval process