Use the information provided by the financial ratios to decide if you would support making the loan. (3 Marks) (500 words

Question 5 (20 marks) RPI, Inc. is a manufacturer and retailer of high-quality sports clothing and gear. The firm was started several years ago by a group of serious outdoor enthusiasts who felt there was a need for a firm that could provide quality products at reasonable prices. The result was RP1, Inc. Since its inception, the firm has been profitable with sales that last year totaled $ 700,000 and assets in excess of $400,000. The firm now finds its growing sales outstrip its ability to finance its inventory noods. The firm now estimates that it will need a line of credit of $100,000 during the coming year. To finance this funding requirement, the management plans to seek a line of credit with its bank The firm's most recent financial statements were provided to its bankas support for the fim's loan request. Joanne Pobie, a loan analyst trance for the Morristown Bank and Trust has been assigned the task of analyzing the firm's loan request RPI, Inc. Balance Sheets for 12/31/18 and 12/31/19 RPI, Inc. Income Statement For the Year Ended 12/31/2019 Sales all credit) $700.000 Lew Cox of good old 20.000 Gross profils $200.000 Less: Operating and interest expenses General and administrative 550,000 Depreciation 30,000 Total 80.000 Profit before Interest and takes (EBIT) $120,000 Lew: Intel 10.000 Profile for taxes $110,000 Les Taxes 27.100 Net income available to common stockholders $12.00 Lew: Cash dividends 1.800 Change in retained camins 551,100 A Cash Marketable securities Accounts receivable Inventory Prepaid rent Total current assets Net plant and equipment Total assets 2018 $16.000 7.000 42,000 50,000 L200 SII6.200 286,000 S402.200 2019 $17.000 7200 38,000 93.000 LLO $156,300 290.000 146.300 Liabilities of Stockholiker Egwy Accounts payable Notes payable Accruals Total current liabilities Long-term debt Common stockholders' equity Total liabilities and equity 2018 $48.000 16,00 6.000 $70,000 S160.000 S172.200 S402.200 2019 $55,000 13,000 5.000 $72.000 $150.000 $223.300 5446,300