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Firlakuza [10]
4 years ago
6

Debt analysis Springfield Bank is evaluating Creek​ Enterprises, which has requested a $ 3 comma 620 comma 000 ​loan, to assess

the​ firm's financial leverage and financial risk. On the basis of the debt ratios for​ Creek, along with the industry averages and​ Creek's recent financial​ statements, evaluate and recommend appropriate action on the loan request.
Business
1 answer:
stepan [7]4 years ago
5 0

Answer:if the debt ratio is lower,the loan request should be granted but if it is higher the loan request should not be granted by the bank.

Explanation:

Debt ratio is a financial ratio which shows the ability of a firm to pay their debt as they fall due.lenders are more concerned with the liquidity position of a firm in order to guarantee the solvency of the firm whenever a loan is granted to such a firm. The debt ratio is used to know the financial leverage of a firm and the financial risk involved in lending to such firm. When a firm is said to be highly leverage it means that such a firm will find it difficult to pay their debt as they fall due because the liabilities in their balance sheet is more than their assets. Debt ratio is calculated as

Total Liabilities/ Total Assets

The Debt ratio is calculated from the Liabilities and Asset figures obtained from their balance sheet. When it is calculated, lower ratio is more preferable than higher rato because it means that a firm will find it easy to settle their debt to their lenders as that debt fall due.but a higher ratio is an indication that such firm will not be able to meet their debt obligation to their lenders as they fall due. Therefore, when a firm has a higher debt ratio it is not advisable to grant a loan to such a firm by the bank. As regard the loan request of Creek Enterprises from Springfield bank, if the debt ratio of Creek Enterprises is lower, the loan should be granted but if it is higher the bank should not grant the loan.

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Hippos is a manufacturer of consumer goods. It intends to sell its products in Taiwan as it is looking to enter into Asian marke
nirvana33 [79]

Answer:

indirect exporting

Explanation:

Based on the information provided within the question it can be said that Hippos is most likely to pursue an indirect exporting. This refers to selling your goods to an intermediary who then sells it directly the customers. This is a great market entry strategy when entering a foreign market since it allows an individual who is already accustomed to the market sell the products, thus minimizing the risk of loss in the foreign market.

8 0
3 years ago
Which of the following is a tax on imported goods or products ?
anzhelika [568]
The answer is D. Tariff

A subsidy is a monetary gift from the government.
A quota is an amount of something.
An embargo is a ban on trade with a country.
7 0
4 years ago
Read 2 more answers
SME Company has a debt-equity ratio of .60. Return on assets is 7.5 percent, and total equity is $486,000. a. What is the equity
polet [3.4K]

Answer:Equity multiplier=1.6

Explanation:

Debt equity ratio is given as  debt/equity , Therefore

Debt  = Debt equity ratio  X Equity

=0.60 x $486,000

= $291,600

The  Total assets given as Liability(debt+equity)  will now be

=$291,600+$486,000

=$777,600.

Therefore Equity multiplier, Total assets/Total equity

=(777,600/486,000)=1.6

7 0
4 years ago
A company uses the weighted-average method of inventory valuation under a periodic inventory system. The company began the year
Lady bird [3.3K]

Answer:

$935.61

Explanation:

Firstly, we need to calculate weighted average inventory cost at every time anchors (purchase - in or sell - out)

At time t = 1, 64 units @ 5 per unit.

At time t = 2, 64 + 110 = 174 units @ (64 x 5 + 110 x 5)/(64 + 110) = 5 per unit.

At time t = 3, 174 - 90 = 84 units @ 5 per unit.

At time t = 4, 84 + 55 = 139 units @ (84 x 5 + 55 x 6)/(84 + 55) = 5.40 per unit.

At time t = 5, 139 - 90 =  49 units @ 5.40 per unit.

Cost of goods sold for the year = 90 x 5 + 90 x 5.40 = $935.61

7 0
4 years ago
On November 1, Year One, a company is paid $12,000 in advance to do a job for a customer. The job has ten separate steps. The fi
Sav [38]

Answer: a. At the end of Year One, the company's liabilities are understated.

Explanation:

Under the Accrual basis of Accounting, revenue should be recorded for only jobs that have been completed. In other words, only earned revenue should be recorded. Revenue that has not been earned but yet received, is to be termed Deferred revenue and should be treated as a current liability.

In this scenario, there are steps that have not been completed so some of the revenue received should be termed deferred revenue. These should therefore be in current liabilities and because they were not, the liabilities for the end of year 1 will be understated.

7 0
3 years ago
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