In: Finance
Fill out the following balance sheet and conduct a ratio analysis. Discuss your reasons for granting or denying an additional loan. |
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Assets |
Liabilities |
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Current Assets |
$40,000 |
Current Liabilities |
$60,000 |
|
Non-current Assets |
Non-current Liabilities |
$50,000 |
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Total Liabilities |
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Owner Equity |
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Total Assets |
Liabilities plus Equity |
$280,000 |
Answer :
Non-Current Asset = 280000 - 40000 ==> 240000
Owner Equity = 280000 - 60000 - 50000 ==> 170000
Ratio Analysis for additional loan with given information :
1. Debt-Equity Ratio = Non current liablity / Owner Equity
= 50000 / 170000 = 0.29
2. Current Ratio = Current Asset / Current Liablity
= 40000 / 60000 = 0.67
3. Debt- Asset Ratio = Non current liablity / Total Asset
= 50000 / 280000 = 0.18
So with the ratio calculated above, company can get additional loan. As its debt-equity & debt-asset is under acceptable limit.