Slippery rock State bank - ratios
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This problem below is concerning financial statement analysis and decision making from various perspectives. Assume that you have just been hired as a loan officer at Slippery Rock State Bank. Your supervisor has given you a file containing a request from Lydex Company, a manufacturer of safety helmets, for a $3,000,000 five-year loan. Financial Statement data on the company for the last 2 years follows.
- calculation of ratios
- Make a recommendation to your supervisor as to whatever the loan should be approved. And explain the reasons of your recommendation.
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Solution Summary
Step by step calculation shown.
Education
- Chartered Accountant (Equivalent to CPA in US), Institute of Charted Accountants of India
- Bachelor of Commerce, West Bengal University
Recent Feedback
- "I got this feedback and I wanted to know if you can explain it to me. I noticed something within your workings which I believe is incorrect. It looks like you've mistaken the Debt ratio for the Equity Multiplier. You've done a calculation to determine Return on Equity (ROE) but if you take a look at the ratios provided for us you'll see ROE listed on the bottom line already. You can use ROE, Profit Margin and Total Asset Turnover to figure out the Equity Multiplier amount. Equity multiplier is not provided for us and we need to calculate it. I really hope this is helpful to you. "
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