Posted: March 29th, 2022
You are a loan officer for NYC Metropolitan Bank. Peter Johnson, President of PJ Corporation just left your office. He is interested in an 8-year loan to expand the company’s operations. The borrowed funds would be used to purchase new equipment. As evidence of the company’s debt-worthiness, Johnson provided you with the following facts:
Current ratio 3.1 2.1
Asset turnover 2.8 2.2
Net income Up 30% Down 10%
Earnings per share $3.50 $2.50
Johnson is a very insistent (some would say pushy) man. When you told him that you would need additional information before making your decision, he acted offended and said, “What more could you possibly want to know?” You responded that at a minimum, you would need complete, audited financial statements.
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