Beruflich Dokumente
Kultur Dokumente
As a loan analyst for National Commercial Bank, you have been presented with the following information.
Panorama Company Assets Cash Accounts receivable Inventories Totalcurrentassets Otherassets Totalassets Liabilities and Stockholders Equity Current liabilities Long-term liabilities Capital stock and retained earnings Total liabilities and stockholders equity Annual sales (all on credit) Rate of gross profit on sales Interest expense Netincome Assume that the ending account balances are representa 300 000 400 000 710 000 1 410 000 930 000 30% 40 000 95000 $ 120000 220 000 570000 910000 500000 1410000
Kalso FIesta Company $ 320000 302 000 518000 I 140000 612000 1752000
350 000 500 000 902 000 1 752 000 1 500 000 40% 60 000
135000
Each of these companies has requested a loan of 555 000 for 6 months with no collateral offered. Since your bank has reached its quota fix loan s of this type. only one of these requests can be granted.
02l0l020CAPE 2011
.7
(a)
companies.
Current ratio Aci&tst (quick) ratio Accounts reeei\ able collection period Inventory turnover ratio Debt t total assets ratio
Debt to equity ratio
12 marksj
(ii) iii)
iv)
12 mar ksf
13 marksj
12 marks} [2 marksl
(v)
(wI
12 marksf
(xii)
(b)
marks)
Prepare a report Dr the bank outlining the performance of EACH company in terms of liquidity and solvency. 16 marks) Indicate which of the tvo co.mpanics s hould receive the loan AND give ONE reason why it should. 12 marksl The lollowtng three mdependent situations relate to Montcgo Company. 0)
In August 20 [0 a worker was tnjured n an accident at one of the factories owned
(c)
(d)
by Montego Company. The accident was partially the result of the workers own neuligence. The worker has sued Montego Company for $800 000, Counsel tKie\ s m ianii3jy qo ale in t K ko K t lw ut A Ii be .Ea 0 it for the compan and that the settlement would cost the company between $250 000 to $500 000.
(ij A suit for breach of contract set. king damages of 5350 Of 0 was tiled by a supplier
against Montego Company on October 4, 2010. M.ontegos legal counsel believes that an unfavourable outcome is ppph.jiJl. A reasonahic estimate of the aw arc to the plaintiff is hetween 8100 000 aw $250 000. No amount within this range is. a better estimate of potential damages than any other amount.
s i i a Pecte C ompany. Pecte s Lawyers believe i.t is p,yqbgle that Montcgo Company t he awarded damaaes of $1 000 000.
( iu
Discuss the proper accounting treatment, including any require.d note disclosures, fOr F \CL i no ii lw t am t ml mte nenrt 90o o rdc f rr t 10 marksi Totrtl 35 marks
5.V[)
OW TEST
1,
I?
U) UJ U
)
H
(
() ()
()
U)
(
0
s
(
r
U U t
)
11
11
1
3
iT
c.
-7
11
U)
(I
H
I
ii
IL
3
-)
( H
c
(1
(
()
(
I
I
cJ
I,
j
p
7
I
11
1
0
I
()
Ii)
I
1)
U
H
H
I
J1
if
I
4)
H
I
If
H
I
/j
() )
)
I
/
I
(1
C)
I
w
j
t
/
F
/
I
/ /
Z2.
__
-.
-s-
-_-z
--
Th;-:;5jJ:J
v_: -J;-f-:Sti
r
Th
zz
ZZZZI
-
:-E/E1
-.,
p
-
c-f______
.
_4
_j
)_
--; --
--
j---
--
--
-:-
--
.-_z
---
LI
111
I UO
&3qwn\ up!pur
put .dud
io
qoq uo
utSfl1t)
H
-
4 H
-4
/ H
_)
[1 1:
l( l) 14
1
H.
,
( H
1:
C
ii)
I
I
1i
:
fl
I
r
jLY
-
3 (b)
3 (c)
3 (d)