Loan A Details:

Ride$-$in$-$Style, LLC$,$ is a limousine service organized as a partnership by two equal owners, Jim Jones and Rhoda Putnam.

They wish to finance two new limousines with a $$470,000$ purchase price. The partners are able to make a $$100,000$

down payment to bring the requested loan to $$370,000.$ The following information was requested and submitted with the

loan application:

BALANCE SHEET

Cash $ $8,000$ Current liabilities $ $5,000$

Accounts receivable $1,000$ Long$-$term liabilities $175,000$

Limousines $260,000$ Partner$$s Equity $270,000$

Office Building $205,000$ Retained earnings $24,000$

Total assets $ $474,000$ Total liabilities and equity $ $474,000$

INCOME STATEMENT

Net Sales $ $162,000$

Less: Cost of Sales $(74,000)$

Gross Profit $ $88,000$

Less: Operating Expenses $(91,000)$

Net Loss $($Operating Loss$)$ $ $(3,000)$

STATEMENT OF CASH FLOW

Net Loss $ $(3,000)$

Add: Depreciation $25,000$

Change in Current Assets and Liab $(10,000)$

Net Cash Provided by Operating Activities $$12,000$

Net Cash Provided by Investing Activities $(8,000)$

Net Cash Provided by Financing Activites $(3,000)$

Net Increase $($Decrease$)$ in Cash $ $1,000$

The limousines are appraised at $$500,000.$ Net operating income has averaged $$40,000$ for the last $5$ years prior to this

year$$s net loss. The annual debt service is estimated to be $$45,000$ per year. Gross income for the property is anticipated

to be approximately $$250,000$ annually, and annual operating expenses are verified to be $$100,000.$ The partner$$s

combined personal financial information shows that they earn approximately $$20,000$ per month, and currently have the

following debts $-$ $$6,000$ in combined mortgages, $$1,200$ in combined car payments, combined credit card minimum

payments of $$900,$ and $$600$ in other relevant debt. Capital expenditures for operating activities were $$2\mathrm{.}000$ and no

dividends.

Loan A Scorecard

Loan Type:

Metric Calculation

Industry

Standard $($if

applicable$)$

Score $(1-5)$;

$1=$ poor

$2=$ marginal

$3=$ adequate

$4=$ good

$5=$ excellent Comments

Net Worth

Working Capital

Loan$-$to$-$Value

Ratio

Debt Service

Coverage Ratio

Operating Expense

Ratio

Debt Yield Ratio

Debt Ratio

Operating Cash

Flow$/$Net Sales

Free Cash Flow

$($FCF$)$

Comprehensive

Free Cash Flow

$($CFCF$)$

TOTAL SCORE

Loan Approval $($y$/$n$)\_\_\_\_\_\_\_\_\_\_\_\_\_$