Share
Explore BrainMass

Providing Financial Statements for Loans

Question: Loretta Smith, president and owner of Custom Enterprises, applied for a $250,000 loan from City National Bank. The bank requested financial statements from Custom Enterprises as a basis for granting the loan. Loretta has told her accountant to provide the bank with a balance sheet. Loretta has decided to omit the other financial statements because there was a net loss during the past year.

1. Is Loretta behaving in a professional manner by omitting some of the financial statements?

a. What types of information about their businesses would owners be willing to provide bankers? What types of information would owners not be willing to provide?

b. What types of information about a business would bankers want before extending a loan?

c. What common interests are shared by bankers and business owners?

Solution Preview

1. Loretta is not behaving in a professional manner by omitting some of the financial statements. Financial statements include Income statement, cash flow statement and balance sheet. Professional behaviour includes disclosing of all the relevant information to the stakeholders including all the financial statements.

a. What types of information about their businesses would owners be willing to provide bankers? What ...

Solution Summary

Solution discusses the types of information about their businesses would owners be willing to provide bankers

$2.19