Additional information before making decision

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:
 
                                           2021             2020
 
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.