SPRINGFIELD
NATIONAL BANK
FINANCIAL ANALYSIS OF DAWSON STORES, INC.
Dawson Store, Inc. has applied to Springfield National Bank to obtain a $ 100,000 line of credit, on an unsecured basis, to cover its short term needs. The company’s credit demand has been evaluated according to the its last four years financial statements and have been of the opinion that lending the company $ 100,000 short term loan may be risky as long as it does not raise its paid-in capital. Evaluation and the supports of conclusion are provided below.
1. THE STATEMENT OF CASH FLOWS
To figure out the recent performance and financial position of the company and to make a conclusion about the credit risk, Comparative Statement of Cash Flows prepared based upon Comparative Balance Sheet and Statement of Income is below:
OPERATING ACTIVITIES Cash Provided ($) 1981 Cash Provided ($) 1982 Cash Provided ($) 1983
Net income 25,183 51,317 65,663
Adjustments
Depreciation 29,611 10,555 17,054
Due changes in working capital
Increase/Decrease in A/R (11,161) (28,563) (29,896)
Increase/Decrease in Inventories 16,717 (33,720) (20,693)
Increase/Decrease in Supplies & Prepaid Expenses& ...