The Milan Fashions Coat Company produces and sells to retail stores various types of coats and outerwear including women's, children's and men's outer garments. They are looking to expand and diversify their product line and sell on-line so they are coming to us for a $3 million commercial loan. The company's five most recent balance sheets and income statements were presented to First United in order to support their loan request. As you can see from the attached income statements and balance sheets from 2012 to 2016, they have had increases in net sales since 2012 but their net income has been up and down for the same time period.

The amount requested is broken down as:

Expand, enhance, and maintain company website

Expand and enhance manufacturing operations Creation and maintenance of customer service center Total loan request

$1,000,000 $1,500,000 $500,000 $3,000,000

Milan Fashions Coat Company has been a long-time client of the bank and borrowed funds from us on previous occasions. The company has grown in terms of sales, assets, and equity; however, this is the largest loan that the company has ever applied for in their entire history.

I would like you to analyze the company's loan request and financial statements. You must provide the following:

1. Based upon your financial ratio analysis, what questions would you like to propose to management to gain clarity on the business operations?
2. Based upon the financial ratio analysis you will have performed on Milan Fashions, would do you recommend that there should be an approval of the loan request? I want you to state your analysis in a detailed memorandum to me by Monday of next week. I would like to discuss your analysis and hear your ideas on Milan Fashions in a meeting on Tuesday. The clients will be in our offices next Friday to discuss their loan request.