Other financial reports and financial analyses which

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Other financial reports and financial analyses which might be helpful to the commercial loan officer of Topeka National Bank include: The statement of cash flows would highlight the amount of cash provided by operating activities, the other sources of cash, and the uses of cash for the acquisition of long-term assets and long- term debt requirement. Projected financial statements for 2014 including a projected statement of cash flows. In addition, a review of Bradburn’s comprehensive budgets might be useful. These items would present management’s estimates of operations for the coming year. A closer examination of Bradburn’s liquidity by calculating some additional ratios, such as day’s sales in receivables, accounts receivable turnover, and day’s sales in inventory. (c) Assume that the percentage changes experienced in fiscal year 2013 as compared with fiscal year 2012 for sales and cost of goods sold will be repeated in each of the next 2 years. Is Bradburn’s desire to finance the plant expansion from internally generated funds realistic? Discuss. Bradburn Corporation should be able to finance the plant expansion from internally generated funds as shown in the calculations presented below. (d) Should Topeka National Bank grant the extension on Bradburn’s notes considering Daniel Brown’s statement about financing the plant expansion through internally generated funds? Discuss. Topeka National Bank should probably grant the extension of the loan, if it is really required, because the projected cash flows for 2014 and 2015 indicate that an adequate amount of cash will be generated from operations to finance the plant expansion and repay the loan. In actuality, there is some question whether Bradburn needs the extension because the excess funds generated from 2014 operations might cover the $70,000 loan repayment. However, Bradburn may want the loan extension to provide a cushion because its cash balance is low. The financial ratios indicate that Bradburn has a solid financial structure. If the bank wanted some extra protection, it could require Bradburn to appropriate retained earnings for the amount of the loan and/or restrict cash dividends for the next two years to the 2013 amount of $2.00 per share.
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e2198da11056adcbc057843b8d72e7092300cf16.xlsx , Problem 24-3, Page 6 of 8, 03/29/2012, 01:32:43 Name: Date: Instructor: Course: through a public subscription of common stock. Daniel Brown, who owns 15% of the Topeka National Bank, asking for a 24-month extension on two $35,000 notes, which are due on June 30, 2013, and September 30, 2013. Another note of $6,000 is due on March 31, 2014, but he expects no difficulty in paying this note on its due date. Brown explained that Bradburn’s cash flow problems are due primarily to the company’s desire to finance a $300,000 plant expansion over the next 2 fiscal years through internally generated funds.
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