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You recently have been hired by First Standard Bank as the assistant loan officer. Your duties include assessing the risk associated with companies applying
You recently have been hired by First Standard Bank as the assistant loan officer. Your duties include assessing the risk associated with companies applying for loans from the bank. During your first week of employment, three companies have approached you about obtaining a two-year loan. For each of these companies, you ask to see their balance sheets over the previous six years. Your analysis of the companies' assets and liabilities appear in the graphs below. Using those graphs, respond to the following questions: Company A Company B Company C $120,000 $120,000 $120,000 $100,000 $100,000 $100,000 Assets $100,000 $100,000 Assets $75,000 $80,000 Liabilities $80,000 $80,000 Liabilities -Liabilities $75,000 $60,000 $60,000 $60,000 $70,000 Assets $40,000 $40,000 $50,000 $40,000 $20,000 $20,000 $20,000 $0 $0 $0 Year 1 2 3 4 Year 1 4 6 Year 1 4 Click here to open the graph(s) in a new tab. Required: 1. Which company's trends in assets and liabilities suggest the highest likelihood of bankruptcy in Year 7? 2. Which company offers the most attractive opportunity for the bank to provide a loan?
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