Section 1

Use relevant tools to assess the current financial situation of the company. Provide qualitative analysis of the company (strengths/ weakness). This can be done in bullet points. Evaluate the companys credit worthiness and collateral. 40%

Section 2

Provide projected financial statements for at least two years to determine their financial needs. Provide detailed supporting quantitative analysis. Clearly indicate assumptions and provide supporting calculations. Financial statements can be done in excel

Decision Provide clear rationale for your decision as well as the pros and cons of this approach. This should be well supported and consistent with the analysis provided in sections 1 and 2

STATEMENTS OF EARNINGS for the Years Ending January 31 Exhibit 2 BALANCE SHEETS as at January 31 2013 2012 2011 2010 ASSETS Current assets: Cash Accounts receivable Inventory Prepaids Total current assets Fixed assets: Furniture and fixtures, cost Less: accumulated depreciation Net furniture and fixtures Leaseholds, cost Less: accumulated depreciation Net Leaseholds Total fixed assets Intangibles Total Assets 9,66412,028199,7003,760$225,152 \begin{tabular}{rr} $61,200 \\ 28,662 \\ \hline$32,538 \end{tabular} $16,174 3,820$12,35444,892$270,044 3,9604,824153,6283,002$165,414 $34,792 $13,95620,836 $6,798 \begin{tabular}{rr} r & 644 \\ \hline$6,154 \\ \hline$20,110 \end{tabular} $185,524 $2,798 2,344 140,792 $149,0963,162 $32,164 $$14,28017,884 $1,200 160$r$15,320 $ $2,5962,278121,2182,786$128,878 \begin{tabular}{rr} $ & 32,164 \\ & 14,314 \\ \hline$17,850 \end{tabular} $ \begin{tabular}{lr} \hline & - \\ \hline$ & 17,850 \end{tabular} 84 $146,812 LIABILITIES AND PROPRIETOR'S CAPITAL Liabilities Current liabilities: Accounts payable Other current liabilities Total current liabilities Long-term bank loan Total liabilities Proprietor's Capital Balance, beginning of year Add: net earnings Subtotal Less: drawings Balance, end of year Total Liabilities and Proprietor's Capital $217,236 $219,6862,450$106,764270 68,87276,168 $288,558$182,932 $270,044 $185,524 $71,286 934$72,220 $83,464 $155,684 $13,584 $29,49615,912 20,7648,732 $164,416 $43,392 \$4 43,392 89,836 $133,228 $21,152 11,340$32,49218,908$13,584 $146,812 Exhibit 3 RATIO ANALYSIS PROFITABILITY Vertical analysis: Sales Cost of goods sold Gross profit Operating expenses: Store salaries Heat and utilities Building maintenance and repairs Rent and property tax Insurance and taxes Depreciation: Furniture and fixtures Leaseholds Interest: Long-term debt Trade debt Other operating expenses Total operating expenses Net earnings Return on equity LIQUIDITY Current ratio Acid test ratio Working capital EFFICIENCY (Based on 365-day year) Age of receivables Age of inventory Age of payables 1 Fixed asset turnover STABILITY Net worth/total assets Interest coverage GROWTH Sales Net profit Total assets Net worth 2013 100.0%71.9%28.1% 6.9% 1.4% 0.1% 3.7% 1.1% 1.2% 0.5% 1.3% 4.6% 25.1%4.3% 3.3% N/A 1.02:1 0.10:1 $5,466 7 days 156 days 154 days 20.0X 2012 100.0%22.9%27.1% 7.8% 1.6% 0.1% 4.7% 0.7% 0.6% 0.1% 1.8% 2.2% 24.6%5.0% 2.6% 241.1% 1.55:1 0.08:1 $58,650 N/A 1.6X N/A 1.6X 2012-13 2011 2010 \begin{tabular}{rr} 100.0% & 100.0% \\ \hline 22.5% & 28.1%71.9% \end{tabular} 7.5%7.0% 1.4%1.7% 0.1% 5.6% 0.9% 0.7% 2.2% 1.2% 24.3%4.7% 3.2% 142.6% 2.06:10.07:1$76,8762.97:10.11:1$85,486 3days146days98days29.7X2days140days67days30.6X2days145days55days23.8X 1.4% 1.7X 5.3% 1.9X 2011-12 23.5% 55.9% 45.6% N/A 0.1% 6.7% 1.5% 2.7% 1.1% 25.5%3.3% 2.6% 83.5% 23.8X 2010-11 2010-11 3.7%(14.2%)12.8%(70.3%)9.4%40.3%12.0%(35.7%) 9.3% 1.7X (35.7\%) DUN \& BRADSTREET CANADIAN NORMS \& KEY BUSINESS RATIOS Industry: Retail - Miscellaneous Products Exhibit 5 STATEMENT OF CASH FLOWS for the year ending January 31