Question 26 (10 marks) Simone Smith, trading as Scents of Jamaica, is applying for a small business loan. She provides the bank with the following information: cash in checking account, $5,000; short-term investments, $10.350: commercial real estate with market value of $115,500; Inventory $30,000; first mortgage loan on commercial real estate, $25.000; home equity loan limit, $70,000; balance on home equity Joan, S10.000: value of home $200,000., automobile with market value of $19,000; automobile loan outstanding. $15.000; credit card debt, $1,500 (a) Using the information provided, construct a statement of affairs (personal balance sheet) for Simone Smith, trading as Scents of Jamaica. The statement should be arranged to show the assets and liabilities in their various categories (eg, current assets and long-term assets being categories) (5 Marks) (b) The bank's policy says that a debt ratio of 20% or less is acceptable for small business loans. Using the debt ratio as the sole criterion, would you make a loan of $100,000 to Scents of Jamaica? Show all working to support your answer. (2 marks) (c) When firms enter into loan agreements with their banks it is very common to have covenants that place restrictions on the minimum current ratio of the firm. Consider the situation of Lyle's Autoparts. The firm has $1,807,626 in current assets and S1,364,994 in current liabilities, If the firm was to expand its investment in inventory and finance this expansion by increasing accounts payable, how much could it increase the inventory by without reducing the current ratio below 1.2 times