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Debt analysis Springfield Bank is evaluating Creek Enterprises,

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Question

Debt analysis Springfield Bank is evaluating Creek Enterprises, which has requested;a $4,000,000 loan, to assess the firm?s financial leverage and financial risk. On the;basis of the debt ratios for Creek, along with the industry averages (see the top of;the next page) and Creek?s recent financial statements (following), evaluate and;recommend appropriate action on the loan request.;Creek Enterprises Income Statement for the Year Ended December 31, 2015;Sales Revenue $30,000,000.00;Less: Cost of goods sold $21,000,000.00;Gross profits $9,000,000.00;Less: Operating Expenses;Selling expense $3,000,000.00;General and administrative expenses $1,800,000.00;Lease expense $200,000.00;Depreciation expense $1,000,000.00;Total operating expense $6,000,000.00;Operating profits $3,000,000.00;Less: Interest expense $1,000,000.00;Net profits before taxes $2,000,000.00;Less: Taxes (rate = 40%) $800,000.00;Net profits after taxes $1,200,000.00;Less: Preferred stock dividends $100,000.00;Earnings available for common stockholders $1,100,000.00

 

Paper#29860 | Written in 18-Jul-2015

Price : $37
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