QUESTION 2 10 points Save An: William Wong is a Senior Manager for Greenwich Company. They are expanding their operations across Ontario. However, they have an urgent need for short-term funds. William approaches the Senior Bank Manager for a short-term loan of $100,000. William believes that the company will be able to return the loan in reasonable time. The Bank Manager asks William to provide the company's key financial statements for the last two years. William had no difficulty in meeting that requirement. The following information pertains to Greenwich Company. Greenwich Company Statement of Financial Position As At December 31 Assets Cash and short-term investments Accounts receivable (net) Inventory Capital Assets (net) Total Assets Liabilities and Shareholders' Equity Current liabilities Long-term liabilities Shareholders' equity Total liabilities and shareholders' equity Year 2 $50,000 25,000 30,000 195.000 $300,000 Year 1 $35,000 25,000 30,000 200.000 $290.000 $50,000 80.000 170,000 $60,000 80,000 150,000 $300,000 $290,000 Statement of Earnings Sales Cost of goods sold Gross margin Operating expenses Net earnings (Net Income) Number of common shares Market price of a common share Amortization, included in operating expenses $90,000 50,000 40.000 20.000 $20,000 4.000 $15.50 5,000 Instructions Assume the role of the senior bank manager evaluating the request for a short-term bank loan of $100,000 for Greenwich Company. a. Choose 5 ratios that you believe to be most appropriate in this situation and expect company to provide that information. b. Indicate the reason for each choice (rather than a description of the ratio), that is why you believe the ration you choose is appropriate. c. Calculate each of the five ratios for year 2 only d. Interpret each ratio number for the purpose in question, and state whether you will grant the loan or not