Show the minimum size loan that would be needed to support the company and that the company can afford Show as much work, data analysis as you can Exhibit 2 Balance Sheets, 2012 2013 (thousands of dollars) 2012 2013 August September October November December January February March April May Cash 8,350 3,328 3,523 4,511 4,239 4,878 5,182 3,962 6,277 4,994 Accounts receivable a 5,793 5,969 6,421 5,851 6,009 6,170 5,606 5,197 3,365 3,744 Inventory 7,154 7,364 7,524 7,219 7,277 7,097 7,529 8,371 11,234 12,163 Current assets 21,297 16,661 17,468 17,581 17,525 18,145 18,317 17,530 20,876 20,901 Gross PP E 45,500 45,500 45,500 45,500 45,500 45,500 45,500 45,500 45,500 45,500 Accumulated depreciation b 30,368 30,488 30,608 30,728 30,848 30,968 31,088 31,208 31,328 31,448 Net PP E 15,132 15,012 14,892 14,772 14,652 14,532 14,412 14,292 14,172 14,052 Prepaid expenses 242 58 23 45 47 52 65 46 46 54 Total assets 36,671 31,731 32,383 32,398 32,224 32,729 32,794 31,868 35,094 35,007 Accounts payable c 4,977 5,197 5,347 5,352 5,110 5,130 5,162 5,122 6,223 5,969 Notes payable, bank 0 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Accrued taxes d 252 4 174 331 107 269 417 140 216 273 Other accrued expenses 1,500 1,542 1,542 1,542 1,542 1,542 1,542 1,142 1,142 1,142 Customer advance payments 1,651 1,651 1,651 1,200 1,200 1,200 800 800 2,700 2,700 Current liabilities 8,380 13,394 13,714 13,425 12,959 13,141 12,921 12,204 15,281 15,084 Shareholders' equity 28,291 18,337 18,668 18,973 19,265 19,588 19,874 19,664 19,813 19,923 Total liabilities and equity 36,671 31,731 32,383 32,398 32,224 32,729 32,794 31,868 35,094 35,007 a Selling term of net 30 days b Depreciation of $120,000 per month c Purchase terms of net 30 days d Outstanding taxes on 2012 fiscal year income were due January 15, 2013 On December 15, 2011, March 15, 2012, June 15, 2012, and September 15, 2012, payments of 25 of each of the estimated tax for 2012 ($1,500,000) were due Taxes payable for 2013 were assumed to be $1,500,000 and would be paid on December 15, 2012, March 15, 2013, June 15, 2013, and September 15, 2013, in equal increments 9,954 18,337 Exhibit 3 Income Statements, 2012 2013 (thousands of dollars) 2012 August 2012 September Fiscal Year Ending 09 30 2012 2012 October 2012 November 2012 December 2013 January 2013 February 2013 March 2013 April 2013 May Eight Months Total Net sales 6,321 5,969 71,642 6,421 6,302 6,009 6,170 6,006 5,197 4,165 3,744 44,014 COGS 4,994 4,727 56,955 5,003 4,914 4,695 4,815 4,692 4,087 3,215 2,876 34,297 Gross profit 1,327 1,242 14,687 1,418 1,388 1,314 1,355 1,314 1,110 950 868 9,717 Operating expenses 773 763 9,509 777 788 733 728 744 685 587 566 5,608 Depreciation and amortization 120 120 1,440 120 120 120 120 120 120 120 120 960 Interest expense a 0 0 0 25 25 25 25 25 25 25 25 200 Interest income b 13 14 120 6 6 8 7 8 9 7 10 60 Profit (loss) before tax 447 373 3,858 502 461 443 489 433 289 225 167 3,009 Income taxes c 152 127 1,312 171 157 151 166 147 98 76 57 1,023 Net income 295 246 2,546 331 304 293 323 286 191 148 111 1,986 Dividends 0 200 400 0 0 0 0 0 400 0 0 400 a 6 annualized interest rate charged on outstanding bank loans b 2 annualized rate of return on beginning monthly cash balances c The federal tax rate on all earnings was 34 Jackson Automotive Systems It was early June 2013 Heather James, vice president at the Michigan State Bank, was considering a loan request from a longtime client, Jackson Automotive Systems Jackson had requested the renewal of an existing term loan with the bank in the amount of $5 million that was originally scheduled to be repaid at the end of the month Jackson was also seeking to borrow an additional $2 4 million to fund the acquisition of a long needed piece of equipment, which it planned to purchase in late July Both loans, which totaled $7 4 million, would be repayable on September 30, 2013 Jackson Automotive Systems, an Original Equipment Manufacturer (OEM) located in Jackson, Michigan, carried product lines in advanced heating and air conditioning systems, engine cooling systems and parts, and fuel injection and transfer systems, as well as various other engine parts Production of these lines required sophisticated and expensive precision equipment The company's customers were relable and reputable automotive assemblers located nearby in the Michigan area Industry Background At the time of the loan in 2013, there were over 5,000 automotive parts suppliers located in the U S Less than 200 companies had annual sales of more than $100 million, while the remaining companies were small producers, representing a highly fragmented market Small private companies, such as Jackson Automotive Systems, had specialized production lines and relied on sales to local customers Given the location of the big three U S automotive companies, the state of Michigarn hosted the l argest presence of OEMs in comparison to the rest of the country The U S OEMs experienced a severe slump in production after the 2008 financial crisis, with sales dropping more than 30 Many suppliers managed to survive the economic downturn by rationing capacity and production The industry was running at about 55 capacity during the financial crisis Traditional products that required low skill labor had already had their production shifted to Asia Overseas producers from countries such as China and India were increasingly competing for U S market share, with any gains coming at the expenses of U S manufacturing participants This fierce competition, coupled with higher cost structures, forced a number of U S OEMs into bankruptcy Fortunately, the industry had rebounded since 2010 and had since returned to profitability in 2011 However, given the slow economic recovery and the high prices of raw materials, competition was still fierce

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Show the minimum size loan that would be needed to support the company and that the company can afford. Show as much work, data analysis

Show the minimum size loan that would be needed to support the company and that the company can afford. Show as much work, data analysis as you can.

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Exhibit 2 Balance Sheets, 2012-2013 (thousands of dollars)

	2012					2013
	August	September	October	November	December	January	February	March	April	May
Cash	8,350	3,328	3,523	4,511	4,239	4,878	5,182	3,962	6,277	4,994
Accounts receivable^a	5,793	5,969	6,421	5,851	6,009	6,170	5,606	5,197	3,365	3,744
Inventory	7,154	7,364	7,524	7,219	7,277	7,097	7,529	8,371	11,234	12,163
Current assets	21,297	16,661	17,468	17,581	17,525	18,145	18,317	17,530	20,876	20,901

Gross PP&E	45,500	45,500	45,500	45,500	45,500	45,500	45,500	45,500	45,500	45,500
Accumulated depreciation^b	30,368	30,488	30,608	30,728	30,848	30,968	31,088	31,208	31,328	31,448
Net PP&E	15,132	15,012	14,892	14,772	14,652	14,532	14,412	14,292	14,172	14,052
Prepaid expenses	242	58	23	45	47	52	65	46	46	54
Total assets	36,671	31,731	32,383	32,398	32,224	32,729	32,794	31,868	35,094	35,007

Accounts payable^c	4,977	5,197	5,347	5,352	5,110	5,130	5,162	5,122	6,223	5,969
Notes payable, bank	0	5,000	5,000	5,000	5,000	5,000	5,000	5,000	5,000	5,000
Accrued taxes^d	252	4	174	331	107	269	417	140	216	273
Other accrued expenses	1,500	1,542	1,542	1,542	1,542	1,542	1,542	1,142	1,142	1,142
Customer advance payments	1,651	1,651	1,651	1,200	1,200	1,200	800	800	2,700	2,700
Current liabilities	8,380	13,394	13,714	13,425	12,959	13,141	12,921	12,204	15,281	15,084

Shareholders' equity	28,291	18,337	18,668	18,973	19,265	19,588	19,874	19,664	19,813	19,923
Total liabilities and equity	36,671	31,731	32,383	32,398	32,224	32,729	32,794	31,868	35,094	35,007

^a Selling term of net 30 days.
^b Depreciation of $120,000 per month.
^c Purchase terms of net 30 days.
^d Outstanding taxes on 2012 fiscal year income were due January 15, 2013. On December 15, 2011, March 15, 2012, June 15, 2012, and September 15, 2012, payments of 25% of each of the estimated tax for 2012 ($1,500,000) were due. Taxes payable for 2013 were assumed to be $1,500,000 and would be paid on December 15, 2012, March 15, 2013, June 15, 2013, and September 15, 2013, in equal increments.
		-9,954
		18,337

Exhibit 3 Income Statements, 2012-2013 (thousands of dollars)

	2012 August	2012 September	Fiscal Year Ending 09/30/2012	2012 October	2012 November	2012 December	2013 January	2013 February	2013 March	2013 April	2013 May	Eight Months Total
Net sales	6,321	5,969	71,642	6,421	6,302	6,009	6,170	6,006	5,197	4,165	3,744	44,014
COGS	4,994	4,727	56,955	5,003	4,914	4,695	4,815	4,692	4,087	3,215	2,876	34,297
Gross profit	1,327	1,242	14,687	1,418	1,388	1,314	1,355	1,314	1,110	950	868	9,717

Operating expenses	773	763	9,509	777	788	733	728	744	685	587	566	5,608
Depreciation and amortization	120	120	1,440	120	120	120	120	120	120	120	120	960
Interest expense^a	0	0	0	25	25	25	25	25	25	25	25	200
Interest income^b	13	14	120	6	6	8	7	8	9	7	10	60
Profit (loss) before tax	447	373	3,858	502	461	443	489	433	289	225	167	3,009
Income taxes^c	152	127	1,312	171	157	151	166	147	98	76	57	1,023
Net income	295	246	2,546	331	304	293	323	286	191	148	111	1,986
Dividends	0	200	400	0	0	0	0	0	400	0	0	400

^a 6% annualized interest rate charged on outstanding bank loans.
^b 2% annualized rate of return on beginning monthly cash balances.
^c The federal tax rate on all earnings was 34%.

Jackson Automotive Systems It was early June 2013. Heather James, vice president at the Michigan State Bank, was considering a loan request from a longtime client, Jackson Automotive Systems. Jackson had requested the renewal of an existing term loan with the bank in the amount of $5 million that was originally scheduled to be repaid at the end of the month. Jackson was also seeking to borrow an additional $2.4 million to fund the acquisition of a long-needed piece of equipment, which it planned to purchase in late July. Both loans, which totaled $7.4 million, would be repayable on September 30, 2013 Jackson Automotive Systems, an Original Equipment Manufacturer (OEM) located in Jackson, Michigan, carried product lines in advanced heating and air conditioning systems, engine cooling systems and parts, and fuel injection and transfer systems, as well as various other engine parts. Production of these lines required sophisticated and expensive precision equipment. The company's customers were relable and reputable automotive assemblers located nearby in the Michigan area. Industry Background At the time of the loan in 2013, there were over 5,000 automotive parts suppliers located in the U.S. Less than 200 companies had annual sales of more than $100 million, while the remaining companies were small producers, representing a highly fragmented market. Small private companies, such as Jackson Automotive Systems, had specialized production lines and relied on sales to local customers. Given the location of the "big three" U.S. automotive companies, the state of Michigarn hosted the l argest presence of OEMs in comparison to the rest of the country The U.S. OEMs experienced a severe slump in production after the 2008 financial crisis, with sales dropping more than 30%. Many suppliers managed to survive the economic downturn by rationing capacity and production. The industry was running at about 55% capacity during the financial crisis. Traditional products that required low-skill labor had already had their production shifted to Asia. Overseas producers from countries such as China and India were increasingly competing for U.S. market share, with any gains coming at the expenses of U.S. manufacturing participants. This fierce competition, coupled with higher cost structures, forced a number of U.S. OEMs into bankruptcy Fortunately, the industry had rebounded since 2010 and had since returned to profitability in 2011. However, given the slow economic recovery and the high prices of raw materials, competition was still fierce