Executive Summary
This summary is to concentrate on the assistance or refusal of the new development. Pro Association has applied for. As a credit chief, it is my commitment to framing the financial flourishing of the relationship to wrap up whether the improvement will be kept up. The application is a 10-year $3 million credit for programming improvement and the obtainment of social occasion contraptions. This summary will facilitate the money-related records that were explored, and the idea of ensuring or denial.
The model for 2016 band 2017 records receivable groupings expanded. This gives the nuances that more clients paid utilizing credit. This affects the remuneration inside the affiliations. This means the advantages that were posted in that quarter, expanded the record receivable balance as opposed to cash (Braggs, 2017). This shows the model isn’t overseeing pondering the FPX 5010 Assessment 3 Performance Evaluation. The records receivable plunging plan from 2016 to 2017 infers that the money would have been assembled, rather than focusing on the resource report, strategies would have made an improvement of cash for the association (Braggs, 2017).
FPX 5010 Assessment 3 Performance Evaluation
Stock turnover is the degree meaning the times a connection has sold and re-energized stock through a particular period (O’Connell, 2016). A serious degree shows invigorated plans or insufficient stock and a low degree shows stock deficiencies and worth created (O’Connell, 2016). The framework of the stock model wraps up the turnover rate has from 2016 to 2017improved. Despite the way that this has additionally evolved it is still under the business standard.
Ace company inventory turnover indicated below for 2016 and 2017:
2017 VS. 2016
| Inventory turnover | 10,000/((6,000 + 5,000)/2) = 1.82 times | $9,500/(($5,000 + $4,800)/2) = 1.94 times |
Creditworthiness is the extent in which an organization or individual is determined to be appropriate to obtain credit (Irby, 2018). The determining factor is based on the consistency to repay the money borrowed in the time allotted to pay and on time. Short-term financial assistance looks at the risk and the collateral within the window of the loan (Irby, 2018). After reviewing the financial health of the company and the potential for growth, the information provided shows growth and a solid increase between 2016 and 2017. We can provide approval for the loan.
References
Braggs, S. Accounts Receivable Analysis. 2017. Retrieved from:
Irby, L. What is Creditworthiness? 2018.Reteived from:https://www.thebalance.com/what-is- creditworthiness-and-why-is-it-important-4159826
Marshall, D., McManus, W., & Viele, D. (2020). Accounting: What the numbers mean (12th ed.).
New York, NY: McGraw-Hill.
O’Connell, B. Inventory Turnover ratio: Definition, Formula and How to Use it. 2016. Retrieved from: https://www.thestreet.com/personal-finance/education/what-is-inventory-turnover- ratio-14763954
Appendix A.
Horizontal analysis of Ace company (in thousands of dollars)
| 2017 | 2016 | Increase | ||
| AMT ($) | % | |||
| Net sales | $20,000 | $18,000 | $2,000 | 11% |
| Cost of goods sold | 10,000 | 9,500 | 500 | 5.2 |
| Gross profit | 10,000 | 8,500 | 1500 | 17.6 |
| – Operating expense | 4,000 | 3,700 | 1,300 | 8.1 |
| = Operating income | 6,000 | 4,800 | 1,200 | 25 |
| Interest expense | 588 | 600 | (12) | (2) |
| Income before income tax | 5,412 | 4,200 | 1,212 | 28.8 |
| Income taxes | 2,165 | 1,680 | 485 | 28.8 |
| Total expenses | 6,753 | 5,980 | 773 | 12.9 |
| Net income | $3,247 | $2,520 | $727 | 28.8% |
The analysis demonstrates the dollar variation between 2016 and 2017 divided by the base dollar amount.
Appendix B. Account Financial ratios.
| 2017 | 2016 | |
| Current ratio | 12,547/7,000 = 1.79 | 10,700/7,000 = 1.53 |
| Total debt to equity | 16,800/6,747 = 2.49 times | 17,000/4,500 = 3.78 times |
| Gross profit rate (gross margin %) | 10,000/20,000 = 50% | 8,500/18,000 = 47.2% |
| Net Profit Rate (Net margin %) | 3,247/20,000 = 16.2% | 2,520/18,000 = 14% |
| EPS (Earnings per share) | 3,247,000/500,000 = $6.49 | 2,520,000/500,000 = $5.04 |
| PE ratio (Price/Earnings) | 104/$6.49 = 16.02 | $81/$5.04 = 16.07 |
| Dividend yield % | 2/$104 = 1.9% | $2/$81 = 2.5% |
| Dividend payout | $1,000,000/3,247,000 = 30.8% | $1,000,000/$2,520,000 = 39.7% |
| Times interest earned | $6,000/$588 = 10.2 times | $4,800/$600 = 8 times |
| Inventory turnover | 10,000/((6,000 + 5,000)/2) = 1.82 times | $9,500/(($5,000 + $4,800)/2) = 1.94 times |
| Accounts receivable turnover | 20,000/((4000 + 3,900)/2) = 5.06 times | $18,000/(($3,900 + $3,800)/2) = 4.68 times |
Appendix C. Inventory turnover ratios.
| 2017 | 2016 | |
| Inventory turnover | 10,000 / ((6,000 + 5,000)/2) = 1.82 times | 9,500 / (($5,000 + $4,800)/2) = 1.94 times |
Inventory turnover = Cost of goods sold / Average inventories
Appendix D.
Ace company Balance sheet
Ace Balance Sheet
| ASSETS | ||
| 2017 | 2016 | |
| Cash | $2,547 | $1,8000 |
| Accounts Receivable | $4,000 | $3,900 |
| Inventories (FIFO) | $6,000 | $,5000 |
| Property, Plant and equipment | $10,000 | $9,800 |
| Other long term assets | $1,000 | $1,000 |
| Total Assets | $23,547 | $21,500 |
| LIABILITED AND EQUITY | ||
| 2017 | 2016 | |
| Current liabilities | $7,000 | 7,000 |
| Long term liabilities | 9,800 | 10,000 |
| Common stick, no par, | 2,000 | 2,000 |
| Retained earnings | 4,747 | 2,500 |
| Total liabilities | 23,547 | $21,500 |
Appendix E.
Ace company Income Statement
| 2017 | 2016 | |
| Net Sales | $20,000 | $18,000 |
| Cost of goods sold | 10,000 | 9,500 |
| Gross Profit | 10,000 | 9,500 |
| -Operating Expense | 4,000 | 3,700 |
| = Operating Income | 6,000 | 4,800 |
| Interest Expense | 588 | 600 |
| Income before income tax | 5,412 | 4,200 |
| Income taxes | 2,165 | 1,680 |
| Net Income | $3,247 | $2,520 |
