Springfield National Bank Case Analysis

Dawson Stores, Inc. (Dawson) needs additional working jacket next year. The golf club would like to obtain a $1,000,000 line of credit, on an unbarred basis from Springfield National Bank (Springfield). The approval of an unsecured loan would be based on the borrowers credit-worthiness. In lodge to evaluate this, the company provided its monetary statements to Springfield for the year 1990 to 1993. Dawson Stores Inc. is a company which has been experiencing consistent growth in terms of its fiscal performance. The relevant balances are as seen in Exhibit A. Its fiscal proportions show that its return on assets and return on directness are both increasing. This shows that Dawson has been continuously using its assets and equity to a greater extent efficiently. Furthermore, the lessen debt ratio and debt-equity ratio have in mind that the company is relying more on equity (mostly from retained earning) rather than on long debts as source of financing. A realis tic area of concern, especially for creditors, would be the decreasing stream ratio of the company. This shows that Dawson is becoming less transparent through the years. Although this can be viewed negatively, careful examination of this ratio may provide whatever light on the system being employed by the company. Exhibit B shows study(ip) areas of Dawsons cash outflow. As can be observed, Dawson is both decreasing its long-run debts and investing in property, whole shebang and equipment.

Without additional paid-in capital and / or increase in long-term debt, it is most promising that these cash outflow resulted to the pass in liquidity since cur! rent assets were used to finance these twain major sources of cash outflow. Thus, the decrease of current ratio is a reflectance of the company paid its long-term debts and increasing its investments. These observations have two important implications. First, callable to the companys investments and proven... This paper is very well compose! Easy to subscribe to and understand. Thanks for sharing with us! If you take to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper