Question

a) If you were a creditor, could you give short term loan to SPRING company? Give reasons, compare with generally accepted accounting standards, find net working capital and discuss the Five C's of credit.
b) Calculate the operating cycle for the company and evaluate the efficiency of the corporation.

PUESTIONS! (3) The first three questions are related with the FALL Company. Compute the actoral 2013 financial ratios listed above with a considering industry average cassume a 360-day year) on if you were a creditor, could you give short term loan to SPRING company? Give reasons, compare with generally accepted accounting. standards, find not working capital and discuss the Five C's of credit. character, capacity, capital, conditions and collateral and bos Calculate the operating cyck evaluate the efficiency of the (dezorlendirmek) for the company corporation. evaluate the of profitability position How could you that company?

c) How could you evaluate the profitability position of that company?

please explain all details.

a, b and c questions are related with FALL company. Compute the actual 2013 financial ratios listed above with considering industry average (assume a360-day year) .

it is wrong. it is not spring company. it is FALL company.

please answer immediately. it is emergency.

Answer 1

Calculation of operating Cycles operating cycle = =) Day saly in inventory A Average Collection ponod. .: Day Sale in Inventory = 365 (on) 360 days Inverstory turnover Rahoo . Average Collection prnoto 365 6) 360 days Account Recroble turnover Ratio day sales in inventory cheon Inventory turnover Ratio 2 Cogs Inventory Inventory turnover Pako ) 87000 - 20 4350 - 360 day 360 days 18 days Inventory tonover Rand 20

& Arorage Collection prod - 360 Acloured day Rearable tour pado Account Rearable trons Patio I credit Palees Ava Acto Avoke All saly are taken saly as crudd - $1,00,000 - 11.23 (0) 11. $ 8900 360 days - 32.73 day (61) 33 day 11 - Operating cycle 9 day sale in intenders Ø Anrage Collectors og 18 days 013 day 51 days Conclusion Call Company Average Colletion poot is more than Industry Average

© Evaluation the Profitability position of fall company fall product Key Pado 2012 2013 particulay Current Rato Quick Rato Average Collection pened Inventory turnover Industy 1.3 0.8 1.0 0.75 0.91 0.63 23 days 3oday 33 days 21.7 64.7% Debt rako Time interest Earned Grob profut margin Net profit margin Return on total Asha Return on sovity 13.6% 1.00% 2.90% 8.2% 12 20 50% 55% 5.5 4 asl 13%. 0.57 0.91 2% 5.55% 4% 5.55% Turno page

rent fato Current Asset Current Lioblties CA CL Couho 1000 ACL Rec=8900 Invento = 4350 Ace pays 9000 Accerols 6675 $ 15675 $14250 0.91 CIR= $14250 - SISAs ② arick Rako Quick Rato a Quick Assets Current Liablties OLA Cash 2 1000 ACC Rec=8900 Aca faya 9000 Accarolyn 6675 $15670 $9900 0.63 GR$9900 = $15,87 ② Average Collection penod of 3 day (Answer b²

Brontoy torony Pako. COGS Inny4350 ® Debt rado : Debt - Aksel $ 800 - ss! $36000 O Time Interest Econod Tones In Come before anderest and Interest 3 3 2000 - u @ $ 500 Gros propt = Cross profit - $19000 - 13% saly $10000 hat. Net Net proft, $900 & 0.9% prof. sales $100000 @ Return on total Assey - EBIT $2000 a 5.55 total Assey & 36000 Ceturn on ourda Alet Income $900 6.551 u ntu 16200

Answer U fall company 0 copital - Calculation of Net working current liabilties / Capital current Assets - Net working Current Liabilties Current Assets Cash 1000 Accounts Recevable 8900 Inventory = 4350 ut $14,250 9000 6675 Accounts payable Accurals & $15,675 NWC= $14,250 - $15,675= - $1425 ($19:25) Net working Capital is negative. Discussion Analysis with fire is of creditora Character: As a lender, we always look at experience and track record and industry to to how trustworty is borrower to repay. oh

"Ability to repay the loan" from financials borowing and and benchmarks with industy, repayment history to chock. Capital The amount of money invested by busines owner. In The Onestion, the common stock only Contains $1000 with retained Earnings of $1500 @ Condition: The condition of borrower busney, whether it is growing cor) faltering as well as borrower use the funds for it! 7 collaterali Assets that are used to generate con se care a wan Conclusion. If working capital temporan'y negative It indicates Company may have inawed a large cash cottay. So, It is nisky to give the loan to fall Company,