Question
You have recently graduated from Yorkville University's BBA program, and have been hired by a major Canadian Bank with a starting salary of $110,000 per
You have recently graduated from Yorkville University's BBA program, and have been hired by a major Canadian Bank with a starting salary of $110,000 per year. Your boss hired you directly from school as she knew you had performed very well in Professor Moscardelli's Managerial Finance course. You worked hard by reading all the textbook and you never behaved unethically by cheating or plagiarizing during any of the exams.
One of the Bank's clients (Earl Grey Golf Corp.) has provided you with their latest Financial Statements.
Earl Grey Golf Corporation
2019 and 2020 Statement of Financial Position
ASSETS
LIABILITIES
2019
2020
2019
2020
CURRENT ASSETS
CURRENT LIABILITIES
Cash
24,046
18,255
Accounts Payable
23,184
18,420
Accounts Receivable
12,448
22,235
Notes Payable
12,000
40,800
Inventory
25,392
49,155
Other
11,571
27,553
TOTAL Current Assets
61,886
89,645
Total Current Liabilities
46,755
86,773
Long Term Debt
80,000
205,000
FIXED ASSETS
Net Plant & Equipment
324,695
485,734
OWNERS EQUITY
Common Stock
40,000
40,000
Retained Earnings
219,826
243,606
TOTAL OWNERS EQUITY
259,826
283,606
TOTAL ASSETS
386,581
575,379
TOTAL Liabilities & OE
386,581
575,379
Statement of Comprehensive Income
2020
Calculate These RATIOS (2020)
Sales
$326,919
Current Ratio
Return on Equity
Cost of Goods Sold
203,199
Quick Ratio
Cash Coverage
Depreciation
32,420
Cash Ratio
Fixed Asset Turnover
Earnings Before Interest & Tax
$91,300
Asset Turnover
Dupont Identity
Interest Paid
17,500
Inventory Turnover
Return on Assets
Taxable Income
$73,800
Receivable Turnover
Taxes (35%)
29,520
Total Debt Ratio
Net Income
$44,280
Equity Multiplier
Dividends
$20,500
Times Interest Earned
Additions to Retained Earnings
$23,780
Profit Margin
Your boss wants you to do to the following;
- Calculate the Ratios ABOVE for 2020 (show all your work);
- The client has asked for a $10 million loan. Based on the ratio's above which one's do you believe are most important to a bank and why? Make a recommendation (short paragraph) should the bank lend the client the money? Why or Why not.
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Fundamentals of Investments Valuation and Management
Authors: Bradford Jordan, Thomas Miller
7th edition
978-0078096785, 78096782, 978-0077861636, 77861639, 978-0078115660
