Comparative Balance Sheets

This Team Assignment will require you to:

Analyze financial data and present the rationale to deny a loan renewal request.

Participate in the Team Discussion Board located under the Unit 3 tab in the left-hand bar.

The Team Assignment requires an analysis of specific financial data of Bob Smith Inc.

Bob is an existing bank customer. When the loan to Bob was originally made in 2013

the bank required Bob to increase the YE 2014 cash balance to at least $70,000. The

Cash Flow Statement and Balance Sheet show an actual YE 2014 cash balance of less

than $34,000.

The Team Assignment requires participation in a team effort to complete the (partially

prepared) 2014 Cash Flow Statement. In Seminar 1 you discussed how to complete

and use the 2014 Cash Flow Statement outcomes to explain how specific accounts

influenced Bob’s low cash balances…in other words…some reasons why Bob has no


This information allows you to substantiate the 2015 loan denial. You are aware this

action will create dire financial circumstances for Bob’s company. As the loan officer you

Units 1-3 [MT480: Corporate Finance]

must pass along the news in a business letter that is most professional and written in an

objective manner. Please use values in the letter whenever possible.

The documents for this project will be reviewed in Seminar 1 and the Team Assignment

will be due by the end of Unit 3.


This project includes data for the a) comparative Balance Sheets, b) partially completed

Cash Flow Statement worksheet and, c) the template outline of the loan denial letter.

Each document will be reviewed in the Week 1 Seminar.

You will locate the comparative Balance Sheets and Cash Flow Statement worksheet in

the Team Assignment Worksheets file.

Please use the template outline to prepare the business letter

Comparative Balance Sheets and Cash Flow Statement Worksheet
ASSETS20142013Cash Up or Down
Cash and marketable securities$33,411$16,566$ 16,845
Accounts receivable$260,205$318,768$ 58,563EXPLAIN
Inventory$423,819$352,740$ (71,079)EXPLAIN
Other current assets$41,251$29,912$ (11,339)
Total current assets$758,686$717,986$ (40,700)
Gross Plant and equipment$1,931,719$1,609,898(321,821)
Less: Accumulated depreciation$(419,044)$(206,678)212,366
Net plant and equipment$1,512,675$1,403,220$ (109,455)EXPLAIN
Goodwill and other assets$382,145$412,565$ 30,420
Total Assets$2,653,506$2,533,771(119,735)
Accounts payable and accruals$378,236$332,004$ 46,232EXPLAIN
Notes payable$14,487$7,862$ 6,625EXPLAIN
Accrued income taxes$21,125$16,815$ 4,310
Total current liabilities$$ 413,848$$ 356,681$ 57,167
Long-term debt$679,981$793,515$ (113,534)EXPLAIN
Total liabilities$1,093,829$1,150,196(56,367)
Preferred stock$$
Common stock (10,000 shares)$10,000$10,0000
Additional paid in capital$975,465$975,4650
Retained earnings$587,546$398,110189,436
Less: Treasury stock$(13,334)$(13,334)
Total common equity$1,559,677$1,383,575176,102
Total Liabilities and Equity$2,653,506$2,533,771119,735
In addition, it was reported that the company had a net income of $3,155,848 and depreciation expenses were equal to $212,366 during 2014.
Net Income$3,155,848
Dividends Paid-$2,966,412

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