the Balance Sheet You just started your new position as a junior credit analyst with a large Canadian bank. For your first assignment, you have been asked to review the balance sheets of Design Your Sign Inc. and Info Tech Systems. Both companies have applied for a $100,000 small business loan. However, given current credit conditions, only one company will be awarded the loan. You manager has given you a brief background on the operations of each company and the purpose of the loan: >>> Design Your Sign Inc.: The company designs and prints corporate signs, business cards, letterheads, etc. Although the company is relatively new, it has been able to secure deals with various local busi- nesses. The loan will be used to purchase additional equipment to expand operations. Info Tech Systems: The company has been researching and developing a new accounting software package for small business users. The new software has significant improvements over current packages in terms of functionality and the user interface. The company has already made sales to local businesses. The loan will be used to continue to develop the software, and to begin full scale marketing. Your manager has provided you with a copy of each company's balance sheet (Exhibit I). Although she is aware that you do not have any other financial statement information at this time, your manager has asked you to prepare a brief report that outlines your key insights from an analysis of the balance sheets. In your report, you should consider the potential strengths and weaknesses (risks) of both companies. Required Prepare the report. Chapter 1. Introductory Cases

and the Balance Sheet You just started your new position as a junior credit analyst with a large Canadian bank. For your first assignment, you have been asked to review the balance sheets of Design Your Sign Inc. and Info Tech Systems. Both companies have applied for a $100,000 small business loan. However, given current credit conditions, only one company will be awarded the loan. You manager has given you a brief background on the operations of each company and the purpose of the loan: Design Your Sign Inc.: The company designs and prints corporate signs, business cards, letterheads, etc. Although the company is relatively new, it has been able to secure deals with various local businesses. The loan will be used to purchase additional equipment to expand operations. " Info Tech Systems: The company has been researching and developing a new accounting software package for small business users. The new software has significant improvements over current packages in terms of functionality and the user interface. The company has already made sales to local businesses. The loan will be used to continue to develop the software, and to begin full scale marketing. Your manager has provided you with a copy of each company's balance sheet (Exhibit I). Although she is aware that you do not have any other financial statement information at this time, your manager has asked you to prepare a brief report that outlines your key insights from an analysis of the balance sheets. In your report, you should consider the potential strengths and weaknesses (risks) of both companies. Required STATEMENTS OF FINANCIAL POSTION DESIGN YOUR SIGN INC. BALANCE SHEET AS AT DECEMBER 31, 2014 Current assets Accounts receivable $22,750 Inventory Non-current assets Land and buildings Intangible assets Total assets Current liabilities Bank overdraft Accounts payable Non-current liabilities Long-term debt Shareholders' Equity Share capital Retained earnings INFO TECH SYSTEMS LTD. BALANCE SHEET AS AT DECEMBER 31, 2014 Current assets Non-current assets Land and buildings Intangible assets 12,75098,950111,700180,200 Current liabilities Accounts payable Accrued Liabilities Non-current liabilities Long-term debt Shareholders' Equity Share capital Retained earnings 15,5757,00022,575 175,325152,750 5,000(125)4,875180,200 Vertical analysis Calculation of vertical analysis for both companies (before) Calculation of vertical analysis for both companies (after) Analysis of results of vertical analysis DYS (2 meaningful comments) Analysis of results of vertical analysis ITS (2 meaningful comments) Total Vertical Analysis Ratio analysis Calculate 3 ratios for both companies (before) Calculate 3 ratios for both companies (after) Any additional ratios - bonus marks interpretation of ratio analysis ( 2 meaningful comments) Total Ratio Analysis Strengths and Weaknesses List 3 items with at least 1 strength / 1 weakness DYS List 3 items with at least 1 strength / 1 weakness ITS Total Strengths and Weaknesses Assumptions List 2 assumptions that were made in the preparation of the information CONCLUSION: Use factors to justify choice