You will prepare the following for the business described above:

a$)$ Income Statement

b$)$ Statement of Cashflow $($direct method$)$

Use the following information to prepare the various statements:

$3.$ After the first three months of doing business, you want to calculate some ratios to see how

your business is doing. You are considering a loan in the amount of $$20,000$ to upgrade your

store$/$office and you want to make sure that you can afford the loan payments $($$$750$ per month

for $3$ years$).$

Use the income statement you created in part $2$ of this assignment and calculate at least two

ratios that can be calculated from an income statement $($Hint: not all ratios can be calculated

from an income statement!$)$

Based on your calculations, comment on whether or not you should take out the loan for

$$20,000.$ Be specific and explain your decision in detail! $($ this includes the calculations, why you chose them and what they represent$).$