Scenario: You are a loan officer for WhiteSands Bank of Taos. Paul Jason, president of P. Jason Corporation,has just left your office. He is interested in an 8-year loan toexpand the company's operations. The borrowed funds would be usedto purchase new equipment. As evidence of the company'sdebt-worthiness, Jason provided you with facts (available in theattached Scenario Worksheet). Jason is a very insistent (some wouldsay pushy) man. When you told him you would need additionalinformation before making your decision, he acted offended andsaid, "What more could you possibly want to know?" You respondedyou would , at minimum, need complete, audited financialstatements.
Develop a minimum 700-word examination of thefinancial statements and include the following:
- Explain why you would want the financial statements to beaudited.
- Discuss the implications of the ratios provided for the lendingdecision you are to make. That is, does the information paint afavorable picture? Are these ratios relevant to the decision? Statewhy or why not.
- Evaluate trends in the performance of P. Jason Corporation.Identify each performance measure as favorable or unfavorable andexplain the significance of each.
- List three other ratios you would want to calculate for P.Jason Corporation, and in your own words explain in detail why youwould use each.
- As the loan officer, what else would you do to gain a betterunderstanding of Paul Jason's, and the Corporation's financialpicture and why?
- Based on your analysis of P. Jason Corporation, will yourecommend approval for the requested loan? Provide specific detailsto support your decision.
