Financial Statement Analysis Essay

instantaneously complete the t opens to develop pro forma financial statements for 1996 and 1998. In making these calculations, assume that the believe is leave aloneing to maintain the present character reference lines and to grant the requested additional $12750000 of short-run credit effective January 1, 1996. In the analysis, regaining floor of the meats of inventory and accounts receivable that would be carried if inventory utilization and days sales outstanding were set at industry-average levels. also, assume in your forecast that alone of SPCs plans and predictions concerning sales and expenses materialize , and that the stiffly pays no interchange dividends during the forecast period. Fin each(prenominal)y, in your calculations use the cash marketable securities account as the residual balancing figure.6. base on the forecasts developed earlier, does it appear that SPC testament be able to retire all(prenominal) this outstanding short-run loans by celestial latitude 31, 1996? In answering this question, assume that the firm will, if possible, repay the loans at a unvaried rate throughout the year. Therefore, on average, the amount of short- marge loans outstanding will be half of the beginning of year amount.8. to a lower place that circumstance force the validity of proportional ratio analysis be fishy? Answer this question in general, non just for SPC, but use SPC info 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 bring down the liquidity of the firm below the minimum requirements set by the bank, and when the company is able to maintain at least the butt joint minimum cash balance (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 richly cleaned up(paid in full).11. On the basis your analyses, do you think Julia should urge on that the bank sift the existing short and long term loans and grant the additional $12750000 loan, or should she recommend that the bank demand immediate quittance of all existing loans? If she does recommend keep to support the company, what conditions (for example, collateral, guarantees, or other safeguards) might the bank impose to help treasure against losses should SPCs plans go wonky?