The Bank of the Midwest is a small retail and commercial lender located in a rural, midwest county. The commercial underwriter at the Bank of the Midwest is presented with a lending situation.The underwriter has a monthly loan approval maximum of $7 million. As of the last day of the month, $6.3 million of loans have been approved and funded (only $700,000 more is allowed according to the bank's lending policy).

Ride-in-Style, LLC, is a limousine service organized as a partnership by two equal owners, Jim Jones and Rhoda Putnam. They wish to finance two new limousines with a $470,000 purchase price. The partners are able to make a $100,000 down payment to bring the requested loan to $370,000. The following information was requested and submitted with the loan application:

BALANCE SHEET
Cash	$	8,000		Current liabilities	$	5,000
Accounts receivable		1,000		Long-term liabilities		175,000
Limousines		260,000		Partner's Equity		270,000
Office Building		205,000		Retained earnings		24,000
Total assets	$	474,000		Total liabilities and equity	$	474,000

INCOME STATEMENT
Net Sales								$ 162,000
Less: Cost of Sales								(74,000)
Gross Profit								$ 88,000
Less: Operating Expenses								(91,000)
Net Loss (Operating Loss)								$ (3,000)

STATEMENT OF CASH FLOW
Net Loss									$	(3,000)
Add: Depreciation										25,000
Change in Current Assets and Liab										(10,000)

Net Cash Provided by Operating Activities $12,000

Net Cash Provided by Investing Activities (8,000)

Net Cash Provided by Financing Activites (3,000)

Net Increase (Decrease) in Cash $ 1,000

The limousines are appraised at $500,000. Net operating income has averaged $40,000 for the last 5 years prior to this year's net loss. The annual debt service is estimated to be $45,000 per year. Gross income for the property is anticipated to be approximately $250,000 annually, and annual operating expenses are verified to be $100,000. The partner's combined personal financial information shows that they earn approximately $20,000 per month, and currently have the following debts - $6,000 in combined mortgages, $1,200 in combined car payments, combined credit card minimum payments of $900, and $600 in other relevant debt. Capital expenditures for operating activities were $2.000 and no dividends.

Calculate and do comments about:

Net Worth Working Capital Loan-to-Value Ratio Debt Service Coverage Ratio Operating Expense Ratio

Debt Yield Ratio Debt Ratio Operating Cash Flow/Net Sales Free Cash Flow (FCF) Comprehensive Free Cash Flow (CFCF)