Financial Statement Analysis Essay

Now complete the t fitteds to develop pro forma financial statements for 1996 and 1998. In making these calculations, discover that the money box is willing to maintain the present ascribe lines and to grant the requested additional $12750000 of short-term credit effective January 1, 1996. In the analysis, take account of the amounts of inventory and accounts receivable that would be carried if inventory practice and days sales undischarged were set at industry-average levels. also, assume in your forecast that all of SPCs plans and predictions concerning sales and expenses materialize , and that the unwaveringly pays no cash dividends during the forecast period. Finally, in your calculations use the cash salable securities account as the residual balancing figure.6. Based on the forecasts essential earlier, does it appear that SPC will be able to retire all this outstanding short-term loans by December 31, 1996? In answering this question, assume that the firm will, if pos sible, repay the loans at a constant rate throughout the year. Therefore, on average, the amount of short-term loans outstanding will be half of the offshoot of year amount.8. Under that circumstance might the validity of comparative dimension analysis be questionable? Answer this question in general, not just for SPC, but use SPC data to illustrate your points. 9. Revise your pro forma financial statements for 1996 to 1997 on the basis of the following assumptions a. short-term loans will be repaid when sufficient cash is available to do so without reducing the runniness of the firm below the minimum requirements set by the bank, and when the company is able to maintain at least the target minimum cash difference (5 percent) b. SPC will reinstate its cash dividend, set at 25% of earning, in the year during which all short-term loans and credit lines have been fully cleaned up(paid in full).11. On the basis your analyses, do you think Julia should recommend that the bank keep o n the quick short and long term loans and grant the additional $12750000 loan, or should she recommend that the bank demand immediate repayment of all existing loans? If she does recommend continuing to support the company, what conditions (for example, collateral, guarantees, or other safeguards) might the bank impose to help protect against losses should SPCs plans go cockeyed?