You are a commercial loans officer at a major bank. It is February 1, 2022. Valentine Chocolate Shop, located in Regina, has approached you with a request for a loan. The company manager brought in a balance sheet and a listing of income statement account balances. The companys year-end is January 31. Prepare a report for your manager with the following:

a. Complete an income statement in proper format.

b. Is this a low or high-risk loan?

c. Provide financial analysis on the balance sheet (ratios)

d. Discuss any non-financial factors you may think are important.

e. Recommend whether to provide the loan and why?

Valentine Chocolate Shop Balance Sheet As of January 31, 2022

ASSETS LIABILITIES AND EQUITY Cash $158,228

Accounts payable $106,080

Accounts receivable $228,280

Wages payable $56,480

Inventory $42,480

Taxes payable $114,000

Total Current Assets $428,988

Total Current Liabilities $276,560

Store furnishings $840,000

Long term debt $194,000

Accumulated depreciation ($504,000)

Shareholders equity $294,428

TOTAL ASSETS $764,988

TOTAL LIABILITIES AND EQUITY $764,988

Income Statement Accounts

Salaries expense $248,616

Cost of goods sold $600,740

Depreciation expense $78,000

Sales revenue $1,244,523

Utilities $45,000

Office expenses $41,727

Income tax rate 25%

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