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Question 1 51 points You are the commercial lender for NAIT Bank. Your longtime client Saxenda Inc Industries is a longstanding client of 7 years. Saxenda Inc is an incorporated company with their President on owner being Marvin O'Brien and has been in business for the last 11 years. Saxenda Inc develops gas-fitting devices for the oil field industry. The company is in Ardrossan just east of Edmonton. They offer their customer 75 Days to settle accounts. Saxenda Inc is looking to secure $600,000 in additional capital as they are looking to expand their current premises to accommodate a new client that they have recently secured. These funds would be used to buy a new machine with the most current level of technology to make the required fittings the client is seeking. They are expecting with this one new account to provide an increase of sales of 35% over the next 7 years. Marvin asked his new CFO Bill, to send you the financial statements that you requested. Bill sent over the un- audited financial statements to you. The audited financials are still with the accountant and will be available in a week or so, but Marvin is pushing to get this loan in place to buy the equipment. Your assistant has collected the industry ratios for you. Bill the CFO has noted that sales have increased in the last three years due to Saxenda Inc's more aggressive selling approach Marvin is a good client, is eager, and wants to know your response quickly to their request of $600,000. Of course, you must do a complete analysis noting any ratios that are cause for concern or required further explanation 2021 2020 2019 SAXENDA INC CONSOLIDATED STATEMENTS OF OPERATIONS Net revenues 2.596 535 3.213,534 2.921,395 1,302.942 348,501 145.714 Costs and expenses Cost of good sold Royalties Product development Advertising Amortization of intangibles Program production cost amortization Seling, distribution and administration Depreciation 1.010,052 398 281 119.999 280.426 39.628 27914 407,655 1,356,111 429,843 85,714 321,353 42.984 21.334 504,524 297.982 34,850 31.261 540.458 203.760 365,700 272.636 Total expenses 2,284,155 2,761,863 2,701,708 Operating profit 637240 451,671 -105.173 Non-operating (income) expense Interest expense Interest income Other income) expense, net $65.545 -12.928 4.789 564,381 -32,869 6.882 565,747 -34.670 8.980 Total non-operating expense, net $57.406 $38,394 $40,057 Earnings before income taxes Income taxes 579.834 133.941 413,277 86,374 -145.230 -32.241 Net earnings $445,893 $326,903 $-112,989 Per common share outstanding 141 342 137,557 108,803 Net earnings Per Share Basic $3.15 $3.12 $2.38 $2.34 $-1.04 $-0.92 Diluted $1.68 $1.26 $-0.51 Cash dividends declared $0.47 $0.36 SD SAXENDA INC BALANCE SHEET PERIOD ENDING DEC 25TH 2021 (Thousands of Dollars Except Share Data) SAXENDA INC BALANCE SHEET PERIOD ENDING DEC 25TH 2021 (Thousands of Dollars Except Share Data) 2021 2020 2019 $538.677 $782.598 $707,556 824,400 275,881 480.125 236,549 206.102 $1.461.453 $173.313 658 260 391.299 285.246 52.117.403 $277.932 279.127 $2.086.964 5314.829 ASSETS Current assets Cash and cash equivalents Accounts receivable, less allowance for doublu accounts at 538,890 in 2020, $59.901 in 2019, and $81.005 in 2018 Inventories Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Other assets Goodwill Other Total other assets Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term borrowings Accounts payable Notes Payable Total current liabilities Long-term debt Other liabities Total abilities 250.602 456,707 351,072 910.595 153500 53.657,002 327 812 516,065 1.158.700 $3,245,670 $2,342.075 $341,942 268.996 133.498 $742.436 $491.835 220.155 $1,454 425 $486.381 391 299 190,164 $1.057.544 $1.075,158 299876 $2.442878 5399.217 327 812 207.722 $934.751 $694,573 275.881 $1.905.205 Shareholders' equilty Preference stock of $2.50 par value. Authorized 5.000.000 shares: none issued 398,584 387 910 306,824 Common stock of 52 82 par value. Authorized and 2020 300.000 shares, issued 145.342 shares in 2020 Additional paid in capital Retained earnings Accumulated other comprehensive doss) earnings 105.257 643.855 -49.532 382 039 254,393 579.783 816 371 -12.989 230.258 Total shareholders' equity 887 649 1.214.126 1.340.465 Total liabilities and shareholders' equity $2342.075 53.857002 3.245.670 1. CALCULATE THE FOLLOWING RATIOS BE SURE TO SET YOUR BALIPLUS TO TWO DECIMAL POINTS: YOU ARE REQUIRED TO DETERMINE THE TREND OF HOW SAXENDA INC IS PERFORMING COMPARED TO THE INDUSTRY STANDARD. NOTE-ONLY ENTER NUMERIC ANSWERS. FOR EXAMPLE IF THE INDUSTRY RATIO IS IN PERCENTAGE ENTER YOUR ANSWER AS PERCENTAGE. IF THE INDUSTRY RATIO IS IN TIMES(X) ENTER YOUR ANSWER AS WHOLE NUMBER AND SAME FOR DAYS. Ratios Industry Standard 2021 2020 2019 Profit on Sales 5.9% Number Number Number Gross Margin 39.5% Number Number Number Return on Assets 7.75% Number Number Number Return on Investment 17.65% Number Number Number A/R Days of Sales Outstanding 65.2 Days Number Number Number A/P Days Outstanding 46 Days Number Number Number Inventory Turnover 5X Number Number Number Sales to Fixed Asset Ratio 11.2 X Number Number Number Sales to Net Worth Ratio 2.5 X Number Number Number Current Ratio 2.31 x Number Number Number Acid Test Ratio 1.62 X Number Number Number Debt to Net Worth 99.5% Number Number Number Current Liabilities to Net Worth 75% Number Number Number Fixed Assets to Net Worth 27% Number Number Number Longterm Liabilities to Net Worth 110% Number Number Number Sales to Working Captial 2.93 X Number Fixed Assets to LT Liabilities 23.5% Number Number Number Number Number Question 1 51 points You are the commercial lender for NAIT Bank. Your longtime client Saxenda Inc Industries is a longstanding client of 7 years. Saxenda Inc is an incorporated company with their President on owner being Marvin O'Brien and has been in business for the last 11 years. Saxenda Inc develops gas-fitting devices for the oil field industry. The company is in Ardrossan just east of Edmonton. They offer their customer 75 Days to settle accounts. Saxenda Inc is looking to secure $600,000 in additional capital as they are looking to expand their current premises to accommodate a new client that they have recently secured. These funds would be used to buy a new machine with the most current level of technology to make the required fittings the client is seeking. They are expecting with this one new account to provide an increase of sales of 35% over the next 7 years. Marvin asked his new CFO Bill, to send you the financial statements that you requested. Bill sent over the un- audited financial statements to you. The audited financials are still with the accountant and will be available in a week or so, but Marvin is pushing to get this loan in place to buy the equipment. Your assistant has collected the industry ratios for you. Bill the CFO has noted that sales have increased in the last three years due to Saxenda Inc's more aggressive selling approach Marvin is a good client, is eager, and wants to know your response quickly to their request of $600,000. Of course, you must do a complete analysis noting any ratios that are cause for concern or required further explanation 2021 2020 2019 SAXENDA INC CONSOLIDATED STATEMENTS OF OPERATIONS Net revenues 2.596 535 3.213,534 2.921,395 1,302.942 348,501 145.714 Costs and expenses Cost of good sold Royalties Product development Advertising Amortization of intangibles Program production cost amortization Seling, distribution and administration Depreciation 1.010,052 398 281 119.999 280.426 39.628 27914 407,655 1,356,111 429,843 85,714 321,353 42.984 21.334 504,524 297.982 34,850 31.261 540.458 203.760 365,700 272.636 Total expenses 2,284,155 2,761,863 2,701,708 Operating profit 637240 451,671 -105.173 Non-operating (income) expense Interest expense Interest income Other income) expense, net $65.545 -12.928 4.789 564,381 -32,869 6.882 565,747 -34.670 8.980 Total non-operating expense, net $57.406 $38,394 $40,057 Earnings before income taxes Income taxes 579.834 133.941 413,277 86,374 -145.230 -32.241 Net earnings $445,893 $326,903 $-112,989 Per common share outstanding 141 342 137,557 108,803 Net earnings Per Share Basic $3.15 $3.12 $2.38 $2.34 $-1.04 $-0.92 Diluted $1.68 $1.26 $-0.51 Cash dividends declared $0.47 $0.36 SD SAXENDA INC BALANCE SHEET PERIOD ENDING DEC 25TH 2021 (Thousands of Dollars Except Share Data) SAXENDA INC BALANCE SHEET PERIOD ENDING DEC 25TH 2021 (Thousands of Dollars Except Share Data) 2021 2020 2019 $538.677 $782.598 $707,556 824,400 275,881 480.125 236,549 206.102 $1.461.453 $173.313 658 260 391.299 285.246 52.117.403 $277.932 279.127 $2.086.964 5314.829 ASSETS Current assets Cash and cash equivalents Accounts receivable, less allowance for doublu accounts at 538,890 in 2020, $59.901 in 2019, and $81.005 in 2018 Inventories Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Other assets Goodwill Other Total other assets Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term borrowings Accounts payable Notes Payable Total current liabilities Long-term debt Other liabities Total abilities 250.602 456,707 351,072 910.595 153500 53.657,002 327 812 516,065 1.158.700 $3,245,670 $2,342.075 $341,942 268.996 133.498 $742.436 $491.835 220.155 $1,454 425 $486.381 391 299 190,164 $1.057.544 $1.075,158 299876 $2.442878 5399.217 327 812 207.722 $934.751 $694,573 275.881 $1.905.205 Shareholders' equilty Preference stock of $2.50 par value. Authorized 5.000.000 shares: none issued 398,584 387 910 306,824 Common stock of 52 82 par value. Authorized and 2020 300.000 shares, issued 145.342 shares in 2020 Additional paid in capital Retained earnings Accumulated other comprehensive doss) earnings 105.257 643.855 -49.532 382 039 254,393 579.783 816 371 -12.989 230.258 Total shareholders' equity 887 649 1.214.126 1.340.465 Total liabilities and shareholders' equity $2342.075 53.857002 3.245.670 1. CALCULATE THE FOLLOWING RATIOS BE SURE TO SET YOUR BALIPLUS TO TWO DECIMAL POINTS: YOU ARE REQUIRED TO DETERMINE THE TREND OF HOW SAXENDA INC IS PERFORMING COMPARED TO THE INDUSTRY STANDARD. NOTE-ONLY ENTER NUMERIC ANSWERS. FOR EXAMPLE IF THE INDUSTRY RATIO IS IN PERCENTAGE ENTER YOUR ANSWER AS PERCENTAGE. IF THE INDUSTRY RATIO IS IN TIMES(X) ENTER YOUR ANSWER AS WHOLE NUMBER AND SAME FOR DAYS. Ratios Industry Standard 2021 2020 2019 Profit on Sales 5.9% Number Number Number Gross Margin 39.5% Number Number Number Return on Assets 7.75% Number Number Number Return on Investment 17.65% Number Number Number A/R Days of Sales Outstanding 65.2 Days Number Number Number A/P Days Outstanding 46 Days Number Number Number Inventory Turnover 5X Number Number Number Sales to Fixed Asset Ratio 11.2 X Number Number Number Sales to Net Worth Ratio 2.5 X Number Number Number Current Ratio 2.31 x Number Number Number Acid Test Ratio 1.62 X Number Number Number Debt to Net Worth 99.5% Number Number Number Current Liabilities to Net Worth 75% Number Number Number Fixed Assets to Net Worth 27% Number Number Number Longterm Liabilities to Net Worth 110% Number Number Number Sales to Working Captial 2.93 X Number Fixed Assets to LT Liabilities 23.5% Number Number Number Number Number

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