Please help with "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." using above information
This part of the assessment represents the primary steps of understanding the nature of cash flows in a business. Year-to-year comparative balance used in the analysis. After review and analysis of the data, you will prepare a business memo to outline the sources or uses of specific account cash flows and how these outcomes support your reasoning for approving or denying the loan. The analysis is based upon year-to-year changes of these specific balance sheet sections: Accounts Receivable, Inventory, Accounts Payable, Wages Payable, Plant Property and Equipment, and Long-term Debt. You will: - Analyze financial data and present the rationale for what your loan committee (you as a member of a team) wants to do on the loan renewal request, and submit supporting documents. Scenario: You are required to conduct an analysis of specific financial data of Bob Smith, Inc. Bob is an existing bank customer. When the Ioan to Bob was originally made in 2016, the bank required Bob to increase the YE 2016 cash balance to at least $70,000 to qualify for the interest rate that the bank used for the original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 Ioan denial or renewal request. You are acting as the loan committee of the bank and you address an internal memo to the loan officer in charge of this loan facility giving the committee's 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. The Balance Sheets and Cash Flow Statements provided in the data worksheet below will assist you in your analysis. From these documents, and from the ones you produced, discuss the following: 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 bett er understand how these individual account changes imnact overall cash flows. CC\&Rs for Bob Smith, Inc. During the original loan, the bank included, as part of the Ioan 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. This part of the assessment represents the primary steps of understanding the nature of cash flows in a business. Year-to-year comparative balance used in the analysis. After review and analysis of the data, you will prepare a business memo to outline the sources or uses of specific account cash flows and how these outcomes support your reasoning for approving or denying the loan. The analysis is based upon year-to-year changes of these specific balance sheet sections: Accounts Receivable, Inventory, Accounts Payable, Wages Payable, Plant Property and Equipment, and Long-term Debt. You will: - Analyze financial data and present the rationale for what your loan committee (you as a member of a team) wants to do on the loan renewal request, and submit supporting documents. Scenario: You are required to conduct an analysis of specific financial data of Bob Smith, Inc. Bob is an existing bank customer. When the Ioan 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 Ioan denial or renewal request. You are acting as the loan committee of the bank and you address an internal memo to the loan officer in charge of this loan facility giving the committee's 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. The Balance Sheets and Cash Flow Statements provided in the data worksheet below will assist you in your analysis. From these documents, and from the ones you produced, discuss the following: 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 bett er understand how these individual account changes imnact overall cash flows. CC\&Rs for Bob Smith, Inc. During the original loan, the bank included, as part of the Ioan 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
