Financial Statement Analysis Essay

Now complete the tables to develop professional person forma financial statements for 1996 and 1998. In making these calculations, assume that the bank is willing to insist the present opinion lines and to destine the requested additional $12750000 of short-term credit effective January 1, 1996. In the analysis, take account of the amounts of inventory and accounts receivable that would be carried if inventory utilization and days gross revenue outstanding were stipulate at industry-average levels. also, assume in your forecast that all of SPCs plans and predictions concerning sales and expenses materialize , and that the firm pays no cash dividends during the forecast period. Finally, in your calculations engagement the cash marketable securities account as the residual balancing figure.6. base on the forecasts developed earlier, does it appear that SPC will be able to sm other(a) all this outstanding short-term loans by December 31, 1996? In answering this hesitation, assum e that the firm will, if possible, repay the loans at a constant straddle throughout the year. Therefore, on average, the amount of short-term loans outstanding will be half of the beginning of year amount.8. Under that circumstance might the lustiness of comparative ratio analysis be questionable? Answer this question in general, not just for SPC, but use SPC data to lucubrate your points. 9. Revise your pro forma financial statements for 1996 to 1997 on the basis of the following assumptions a. short-term loans will be repaid when sufficient cash is available to do so without reducing the liquidity of the firm below the stripped requirements set by the bank, and when the company is able to maintain at least the target minimum cash balance (5 percent) b. SPC will reinstate its cash dividend, set at 25% of earning, in the year during which all short-term loans and credit lines direct been fully cleaned up(paid in full).11. On the basis your analyses, do you think Julia should root on that the bank extend the existing short and long term loans and grant the additional $12750000 loan, or should she recommend that the bank demand immediate quittance of all existing loans? If she does recommend continuing to support the company, what conditions (for example, collateral, guarantees, or other safeguards) might the bank impose to help protect against losses should SPCs plans go awry?