Question 3 10 marks Barton Company requested a large loan from First National Bank (FNB) to acquire a large...

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Accounting

Question 3 10marks
Barton Company requested a large loan from First National Bank(FNB) to acquire a large piece of land for future expansion. Bartreported current assets of R1,900 ,000 (R430 000 in cash) andcurrent liabilities of R1,075,000. FNB denied the request for anumber of reasons. When the Company received the news, thefinancial controller immediately paid R420 000 that was owed toseveral trade creditors. He then asked the bank to reconsider theloan application. Based on the abbreviated facts would you adviseFNB to advance the loan? Why? Are the actions of the financialcontroller ethical?
1) What could be the reasons for the denial of the request for aloan? (2)
2) After the actions of the controller what would be your advicefor FNB and why (7)
3) Are the actions of the financial controller ethical? (1)
NB: limit your answer for all 3 sub-questions to 500 words orless

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4.3 Ratings (613 Votes)

Financial figures of Barton Company Current Assets R 1900000 Current Liabilities R 1075000 Current Ratio Current Assets Current Liabilities 19000001075000 177 a The possible reason for denial of loan is See Answer

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