LL Sams & Melinda Garcia Career Services: Evaluate Balance Sheet
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The proprietors of two businesses, L.L. Sams Company and Melinda Garcia Career Services, have sought business loans from you. To decide whether to make the loans, you have requested their balance sheets. Click Balance sheets below to view.
Solely on the basis of these balance sheets, to which entity would you be more comfortable lending money? Explain fully, citing specific items such as the accounting equation and amounts from the balance sheets. In addition to balance sheet data, what other information would you require? Be specific.
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Solution Summary
This solution evaluates the balance sheets of LL Sames and Melinda Garcia Career Services.
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Review of Balance sheets:
Melinda Garcia has high amount of liabilities as compared to L.L Sams. Debt ratio (the ratio between total debt to total assets) is 30000/211500=.14 in case of L.L.Sams and in case of Melinda Garcia debt ratio is (174000/244000) =.71. If I am the lender, then I would prefer only L.L. Sams because it has low debt ratio compared to Melinda Garcia. If I am going to lend ...
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