1. 18 MARKS You are a commercial loans officer at a major bank. It is November 1, 2018. Trail Bike and Hiking Shop, located in Regina, has approached you for a loan. The company manager brought in a balance sheet and a listing of income statement accounts. The company's year-end is October 31. Prepare a report for your manager with the following: 1) Prepare an income statement in proper format. 2) Is this a high or low risk loan and why? 3) Provide a financial analysis (ratios) on the balance sheet. 4) Discuss any non-financial factors you may think are important. 5) Recommend whether to provide the loan and why. Trail Bike and Hiking Shop Balance Sheet As of October 31, 2018 + ASSETS LIABILITIES AND EQUITY Cash $8,228 Accounts payable Accounts receivable $368,280 Wages payable Inventory $42,480 Taxes payable Total Current Assets $418,988 Total Current Liabilities $206,080 $46,480 $84,000 $336,560 Store furnishings Accumulated depreciation $840,000 Long term debt ($504,000) Shareholders' equity $284.000 $134,428 $754.288 TOTAL ASSETS $754.988 TOTAL LIABILITIES AND EQUITY Income Statement Accounts Salaries expense Cost of goods sold Depreciation expense Sales revenue Selling expenses Office expenses Income tax rate $248,616 $710.740 $78,000 $934,523 $45,000 $51,728 25%