Financial Assignment

Financial Assignment - Therefore as a bank loan officer I...

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Financial Assignment #4: 1) a) b) The debt ratio told us that the company has more asset than debt because the ratio is less than one. This ensures that if the company was ever to go bankrupt that they would be able to pay back an debt obligations by liquidating assets. Based on the Return on Asset ratio we can see that the company makes 11% on every dollar that they invest in on assets. Based on the current ratio the company is relatively strong at meeting its short term debt obligations with ratio of 1.19. This is ideal because it is higher than 1.
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Unformatted text preview: Therefore as a bank loan officer I would be interested in extending the loan because there is high probability that the company will remain stable and be able to pay off the loan. There is not a high probability the company will go bankrupt and if it does they should be able to pay back debt through liquidating their assets. c) CC should relax its collection efforts if the pretax opportunity cost of funds is 16 percent, the variable cost ratio is 75 percent, and taxes are 40 percent because . 2....
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