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Rjet Task 5


Submitted By zulika
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RJET Task 5 A. Create a report for the chief financial officer in which you do the following: 1. Summarize the key points of the company’s financial picture that could impact the bank officer’s position.
In order to analyze the key points of the company’s financial picture, we will need to focus on the following three areas: profitability, liquidity, and solvency. The banker will examine these three areas very closely when considering the loan for the European expansion.
Profitability is another term for how much money the company actually makes. Sales and expenses drive profitability. During year 13, sales suffered a decline of 6.44%, but in year 14 have increased by 1.28% over the previous year. This will be a salient point for the banker to consider because it shows that sales are rebounding a bit over the decline in year 12. Another decline was shown in gross profit and selling expenses in year 13 of 6.44% and then increased in year 14 by 1.28%. This is directly related to the sales figures. This demonstrates to the banker that the company managed to maintain its cost of goods sold and its selling expenses during those years. One area that does not show as favorably is the area of general and administrative expenses. These increased by 7.24% in year 13 and by 6.5% in year 14. From these figures, the banker will be able to see that the company did not manage those expenses well during that period of time. These factors all played a role in the decline of 67.66% in net earnings in year 13 and 72.11% in year 14. The banker will look at these figures and see that, even with a rebound in sales in year 14, overall net earnings showed a drastic decline in years 13 and 14.

Liquidity is a term that tells us how much money a company has to spend. Assets drive liquidity. In year 13, current assets increased by 12.3% because of a cash increase of 64.1% and an

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