FINANCIAL INDICATORS QUESTIONNAIRE

What is a financial indicator?

A financial indicator is a relationship of the figures extracted from the statements

financial and other reports of the company with the purpose of forming a
idea about the behavior of the company; they are understood as the
quantitative expression of the behavior or performance of a whole
organization or one of its parts, whose magnitude when compared to some
reference level, may be indicating a deviation on which it
they will take corrective or preventive actions as appropriate.

The interpretation of the results produced by economic indicators and

financial is directly related to activities, organization, and controls
interns of the Companies as well as to the changing periods caused
by the various internal and external agents that affect them.

2. Mention four standards of comparison used in the analysis of

reasons.

The four comparison standards used in ratio analysis are:

Mental standards of the analyst, understands the criterion of this based on

for the experience and their knowledge.

The historical records of the company; that is, indicators of others

years.

The indicators calculated based on budgets or objectives

proposed for the period under study.

The average indicators of the sector to which the company belongs.

3. What are liquidity indicators and what is their usefulness?

Through liquidity indicators, the ability of the

Company to face short-term obligations incurred;
the higher the quotient, the greater the possibilities of
cancel short-term debts; which provides great usefulness as
it allows to establish knowledge of how the liquidity of this is
considering the current structure.

4. What are the most commonly used liquidity indicators? Interpret them.
meaning and determine the implicit assumptions in these indicators.

The most commonly used liquidity indicators are: Working Capital, the reason
current, the test acidity and alkalinity.

Working Capital: Expresses in value terms what the current ratio

present it as a relationship. Indicate the value that would remain for the company,

representing in cash or other current liabilities, after payment

all their short-term liabilities, in the event that they had to be
canceled immediately.

Working capital = Current assets - Current liabilities (Monetary Units)

Current Ratio: Also known as current relationship, this has as

object to verify the possibilities of the company to meet the commitment; there are
that it is important to consider that it is short-term.

Index name Formula How is it calculated

Current Ratio Current Assets

Current Current / Total Balance Sheet
Current Liabilities

Acid Test: (acid-liquid ratio test) This is more rigorous,

Reveals the company's ability to meet its obligations
currents, but without accounting for the sale of their stocks, that is,
basically with the cash balances, the revenue from your accounts by
collect, their temporary investments and some other easily liquidated asset
 that may exist, different from the inventories. It is a relationship similar to the
previous but without taking inventories into account

Index name Formula How is it calculated

Acid Test Current Assets - (Balance Sheet Total Assets)
Inventories) / Liabilities Current - Balance Sheet PUC
Current 14)/ Total Liability Balance Sheet
Current

Operating income + Depreciation + Amortization + Provisions

5. Analyze the behavior of liquidity indicators for:

a. Commercial company: for the behavior of the indicators of

liquidity there are three aspects to consider, first of all the
inventories as the most important item, cash sales,
because it is the one that these types of companies handle the most, what
it symbolizes that the portfolio is not significant and finally the investment
it is short-term; since it manages a shorter period.

b. Manufacturing company: in this behavior of the indicators

in liquidity, it should be remembered that this type of company uses a
longer time period, inventories are taken into account but
they are not significant, accounts receivable is an aspect
important for these, and the investment is already long-term.

c. Service company: in the behavior of the indicators of

liquidity of these companies, inventories are no longer important,
generally not taken into account to indicate the performance of
the company, but accounts receivable take on more importance and the
cash convertibility of these and their investment is fixed.

6. If the company under analysis is operational, what factors need to be considered?

to be taken into account for the study of liquidity?

The factors to consider for the study of liquidity are: the quality of
current assets, this means the term of convertibility in
cash; the next aspect is the flexibility of current liabilities, this
it has to do with the comparison of current assets with liabilities
currents; and finally the seasonality of sales; refers to how it influences
the level of the portfolio.

7. What are debt indicators and what are they used for?

The debt indicators aim to measure to what extent and to

What role do creditors play in the financing of the company.
Similarly, it aims to establish the risk incurred by such
creditors, the risk of the owners, and the convenience or inconvenience of a
determined level of indebtedness for the company.

8. Explain and give an example of the "Debt Level" index.

The level of indebtedness indicates the proportion in which they participate

creditors on the total value of the company. It also serves to identify the
risk assumed by those creditors, the risk of the owners of the entity eco-
economic and the suitability or unsuitability of the level of indebtedness
presented. High levels of indebtedness can only be accepted when
the return on total assets rate is higher than the average cost of
financing.

9. Identify and analyze the accounts that can substantially modify the
analyst's concept regarding a company's indebtedness.

The accounts that can substantially modify the analyst's concept

regarding the debt of a company, they are those liabilities that
consider that they are not fully enforceable or that the payment of this can be
postpone after the expiration date of it, taking into account
the convenience of the creditor and the company; likewise among the
how many of the heritage whose value there is no absolute certainty.

These accounts that can modify the analyst's concept are: loan of
partners; the partners can extend the loan period or convert it into
an investment, deferred liabilities; this may indicate that the money is already available

intended for this payment, capital; through a capitalization of a

debt and valuations may be overestimated or due to effects of
inflation.

10. Explain and give an example of the index 'Debt Concentration in

the Short Term.

Index name Formula What is

Current liabilities
Concentration of
Total Liabilities With
It indicates the capacity of
indebtedness to
short-term debt
short term. Third parties

11. Explain the index 'Number of Times Interest is Earned'.

12. What is a leverage ratio?

The leverage ratio or Leverage indicator shows the

third-party participation in the company's capital; that is to say, compare the
financing originated from third parties with the resources of the shareholders,
partners or owners, to determine which of the two parties bears greater risk.

Index name Formula How is it calculated

Total Liabilities Balance Sheet

Leverage Total Liabilities /
Heritage Total Balance
Financial Total Assets
General

What could be its interpretation from the point of view:

a. The company? The higher the index, the better it is to consider.

that the profits are positive, which indicates that the assets
financed produce a profitability higher than the interest that is
debtor.

b. The creditors? If it is too high for the creditor, it is considered risky.

although it presents flexibility in this indicator since it understands

that the owner seeks to maximize profits with a high level of debt.
 Index name Formula What it is

What is the participation of the liability?

Leverage Total Liabilities
external with regarding the
total Heritage
company assets.

Indicate the participation they have

Leverage to Total Current Liabilities
current liabilities within the
short term Heritage
heritage.

Passive With Entities Indicate the concentration that

Leverage Financial they have total liabilities with
Total Financial financial entities about the
Heritage heritage.

13. Explain in general terms what they are, what they are used for, and how they

they calculate the activity indicators.

Activity indicators, also known as turnover indicators, refer to

to measure the efficiency with which a company utilizes its assets, according to the
recovery speed of the values applied to them. They constitute a
important complement of liquidity reasons; because they measure the
duration of the production cycle and the collection period. Some indicators of
activity are:

Portfolio rotation: credit sales in the period/accounts receivable

average.
Average collection period: average accounts receivable x 365 days/sales
on credit.
Inventory turnover (# times) commercial companies: cost of the
merchandise sold in the period/average inventory.
Inventory turnover (#days) commercial companies: average inventory
x 365 days/cost of goods sold.
Inventory turnover (# times) industrial companies: cost of
total average sales/inventory.
Inventory turnover (# days) industrial companies: total inventory
average x 365 days/cost of sales.
Fixed asset turnover: sales/fixed asset.
Operational asset turnover: sales/operational assets.
Total asset turnover: sales/total assets.
Supplier Rotation (# times): purchases on credit/accounts payable
average.
 Supplier turnover (# days): average accounts payable x 365
days/credit purchases.

14. Define and explain the indicator 'Portfolio Turnover'. Indicate two ways.
to calculate it.

The portfolio turnover establishes the number of times that accounts receivable
charging rotate, on average over a certain period of time generally
one year. The portfolio turnover indicator allows us to know the speed of the
collection but it is not useful for evaluating whether such turnover is in accordance with the

credit policies set by the company. For this last comparative it is

I need to calculate the number of days for accounts receivable turnover.

Index name Formula What is it

Credit sales
Times rotation of Show the times it rotates
Accounts receivable
wallet portfolio in the year.
average

There is another way to analyze the accounts receivable turnover and it is through
from the calculation of the average collection period, through the following formulas
the first called Debtor Collection Period Clients and the following are
the Recovery Period that can be summed up in one, which is equal to 365 days
about the number of times accounts receivable rotate.

Name of Formula How is it calculated Unit of

index measure
General Balance PUC 1305 type 1
General Balance PUC 1305 type 2
Period of Debtors
previous period + Balance Sheet
Collection Clients
PUC 1305 type 1 + Balance Sheet days
debtors Average x 360)/
PUC 1305 type 2 period
Clients Sales
actual)/2)x360)/ State of
PUC Results 41

Period of
recovery of 360 /(Rotation C
360/Index 124 days
Accounts Payable x P Suppliers)
and Suppliers
Period of 360/ Rotation
recovery of Debtors 360/Index 369 days
customer debts Clients

Period of
360/ Rotation
Asset Turnover 360/index 123 days
Fixed Assets
Fixed

15. Comment on four important aspects to be taken into account.

when the Portfolio Rotation is interpreted.

The four important aspects that must be taken into account when
the Portfolio Turnover means:

That the sales figures correspond to the total sales and not
only to a part of the sales.

Take the latest balance of accounts receivable.

Do not involve different accounts such as accounts receivable from partners.

accounts receivable from employees, various debtors, and others.

When analyzing accounts receivable, pay close attention to the

provision for doubtful receivables; since with these the
the company acknowledges that there is a percentage that can be lost.

16. Define the indicator "Inventory Turnover" for a commercial company and
a manufacturing company. Analyze some aspects that must be taken into account
to consider for its interpretation.

It is important to keep in mind that the inventory turnover of goods

The company rotates several times a year, which means that the inventory is
converts several times a year into cash or accounts receivable. That is to say
shows the times the inventory rotates in the year. Once the number is obtained
of inventory days, the average monthly cost of sales is taken and is
divide by 30 and then multiply by the number of days the inventory rotates,
 what the inventory the company must have to serve
correctly the sales.

Name of Formula How it is calculated unit of

index measure
General Balance PUC
Period of Inventories 14 previous period +
Rotation of Average x 360) / Balance Sheet PUC 14 days
Inventories Cost of Sales (current period) / 2) x 360)/
Annex 2 PUC 61

a. Commercial Company: For commercial companies, inventories

simply represent the cost of the goods in possession
same.

Index name Formula How is it calculated unit of

measure
General Ledger PUC
(Product not Inv.
Rotation period 1435 previous period +
manufactured by the
of inventory General Balance PUC days
company x 360)/
(Commerce) 1435 current period) / 2) x
Cost of Sales
360) / Appendix 2 PUC 61

b. Manufacturing Company: For the industrial company, the inventories

they present the value of raw materials, materials and associated costs
of manufacturing, in each of the stages of the production cycle.

Name of the Formula How is it calculated unit of

index measure
General Balance PUC
Period of (Product Inv.
1430 previous period +
Rotation of Average Finished
General Balance PUC days
Inventory x 360) / Cost of
1430 current period) / 2) x
Manufacturing Sales
360) / Annex 2 PUC 61
17. Define the indicator 'Fixed Asset Turnover' and analyze some aspects
that must be taken into account for its interpretation.

The fixed asset turnover measures how much income my assets generate.
gross fixtures

Index name Formula How is it calculated

 Income Statement PUC 41 /
Operating Revenues/ General Balance PUC 15
Asset Rotation
(Property P/ E current period + Balance
Fixed
Average General PUC 15 period
previous)/2)

It should be noted that the rotation is calculated in pesos and, consequently,

Hello, the actual productivity of the company is not analyzed, for which it would be necessary to

to know, among other things, the number of articles produced, the capacity
installed and the sales and purchases of fixed assets during the period that is
analysis

18. Explain the Operational Asset Turnover ratio.

Index name Formula What is

Measure how much income they generate for me.
Sales operational assets, that is to say all
Asset Turnover
Operational Assets the assets that are related
Operational.
Brutes directly with the social object of the
company.

19. Explain the Total Assets Turnover ratio.

Name of the index Formula What is it

Asset Rotation Sales Measure how much income they generate me.
totals Gross total assets total assets.

20. What are performance indicators and what are they used for?

Also called profitability or lucrativity. They measure the effectiveness of the

company management to control costs and expenses, thus transforming
sales in profits. These indicators are a tool that allows for
investor analyze how the returns on securities are generated
invested in the company, through the profitability of equity and the
return on assets.

That is, they measure the productivity of the committed funds in a

business. Let us remember that in the long term, the important thing is to guarantee the
company's permanence in market growth and therefore its
value. Allows you to see the company's performance compared to the
sales and capital.

21. Interpret the gross profit margin. How can they affect the
inventories and depreciation in your analysis?

Profitability indicator defined as gross profit over sales

nets, and expresses the determined percentage of gross profit (Sales
Netas - Cost of Sales that is being generated for each peso sold.

First of all, it is necessary to take into account that the gross profit margin
It means that the company's sales generated a X% profit in the year;
In other words, every peso sold in the year generated $X of gross profit.
the year.

Index name Formula

Gross Margin Gross Profit Revenue / Operational x 100

22. Interpret and comment on the operational profit margin.

Profitability indicator defined as operational profit over the

net sales and it indicates whether the business is profitable or not, in itself,
regardless of how it has been financed.

Index name Formula

Operational Utility / Operational Income

Operational Margin
x 100

23. Interpret and comment on the net profit margin.

Profitability indicator defined as net profit over sales

net profit. Net profit is equal to net sales minus the cost of sales,
minus operating expenses, minus the provision for income tax,
more other income less other expenses. This ratio alone does not reflect the
profitability of the business.

Index name Formula

Gains and Losses

Net Margin
Operating Income x 100

24. Define and comment on the indices 'Return on Equity' and 'Return'
of Total Assets.

The average return on equity determines the efficiency of the

management to generate profits with the organization's capital is
to say measures the rate of return of the average equity partners
determine. This index will be obtained by dividing the total amount
composed of the accounting assets plus the operational management, among the total
from the assets. These figures will be taken from the published balance sheet and the

result obtained multiplied by one hundred (100).

Return on Equity:
Net Utilities
Heritage

The return on total assets determines the efficiency of management to

generate profits with the total assets available to the organization, therefore
the higher the returns on investment, the more efficient it is
organization.

Total Asset Performance:

Net Utilities
Gross Total Assets

25. What does the Dupont system consist of? How is it calculated? Comment on it.

interpretation in a company:

a. Commercial
 b. Industrial

It consists of a demonstration of how some can be integrated.

of the financial indicators consists of the so-called System
Dupont. This system correlates activity indicators with the
performance indicators to try to establish whether the performance of the
investment (net profit/total assets) primarily comes from the
efficiency in the use of resources to produce sales or net margin
of the profits that such sales generate.

26. Analyze and explain some of the relationships that must be established between
the different financial indicators.

The fundamental thing is that the analyst has a clear understanding of the
company; therefore, it should seek information about the company, its
partners, their products, their consumers, distribution system,
competitors, etc. Accepting as a major general limitation in the
analysis, its static nature, since it is based on an account cut-off
As of now, it is advisable to analyze the financial situation through the
use of a representative number of balances to be able to observe the
trend shown by the different indicators and hopefully based on states
projected financials since decisions are oriented to the future.

It is important for the analyst to compare liquidity, activity, and debt.

profitability and coverage; to indicate exactly the company's situation;
since they are closely related, it is important to keep in mind the
current reason can be supported or deteriorated by the rotation of
inventories, likewise the level of indebtedness affects the
company profitability, which is why it cannot be considered on its own but in a
joint form
 PROPOSED EXERCISES

1. AGRICULTURAL FOOD PRODUCTS S.A. is a company located

near Cali and dedicated to the production of dairy products.

The firm has been operating for more than 20 years and has the most modern
technology in the development of this type of products.

The following are the classified financial statements

corresponding to the last three years, based on which the request is made
next

a. Calculate the liquidity indicators

b. Calculate the activity indicators

c. Calculate the debt indicators

d. Calculate the profitability indicators

e. Previous aspects cloths

Additional Data for the Calculation of Rotations

Inventario de Producto Terminado (Dic. Año 0) = 18300

Product Inventory in Process (Dec. Year 0) = 7400

Raw Material Inventory (Dec. Year 0) = 36700

Other Inventories (Dec. Year 0) = 23500

The cost of direct labor and manufacturing expenses amounts to 10% and 5%
of manufacturing cost, respectively. Understanding manufacturing cost as the
sum of the cost of raw materials used, labor cost, and expenses of
manufacturing.
 AGRICULTURAL FOOD PRODUCT S.A.
STATEMENT OF LOSSES AND PROFITS
($ Miles)

January- (January- (January-

Dic) Dic)
YEAR 1 YEAR 2 YEAR 3
NET SALES 1124313 1942971 2951052
Cost of Sales -812876 -1437530 -2002992
GROSS PROFIT 311437 505441 948060
Sales and Administration Expenses -263780 -402014 -672326
Operational Utility 47657 103427 275734
Other Income 5917 7924 7961
Financial Expenses -15236 -20877 -79769
Earnings before taxes 38338 90474 203926
INCOME TAX PROVISION -16100 -38000 -85700
UTILIDAD ANTES DE PARTIDAS EXT 22238 52474 118226

USEFULNESS OF EXERCISE 22238 52474 118226

AGRICULTURAL FOOD PRODUCT S.A.

BALANCE SHEET
($ Miles)

ACTIVE YEAR 1 YEAR 2 YEAR 3

Cash 25700 56692 93718

Temporary Investments 360 7314 41117
Accounts Receivable 109456 249549
Finished Goods Inventory 25128 39334 76750
Inventory of Products in Process 12766 29031 51091
Raw Material Inventory 53124 72087 110618
Other Inventories 33878 39982 62941
Other Current Assets 32597 66975 90690

Current Asset 293009 473723 776474

Land, Buildings and Equipment 211428 282825 502440

Accumulated Depreciation -48005 -64343 -97082

Fixed Asset Subtotal 163423 218482 405358

Permanent Investments 15769 23689 1813

Deferred Assets 1293 409 0
Other Assets 5549 8452 14137
Valuations 6047 6454 15446
 TOTAL ASSETS 485090 731209 1213228

PASSIVE

Banking Obligations 157268 268186 390638

Current Portion of Liabilities
Long Term 5953 11093 19318
National Suppliers 89512 102323 207319
Income Tax Payable 3735 20401 55579
Other Current Liabilities 25870 32479 54154

CURRENT LIABILITIES 282338 434482 727008

Long-Term Bank Obligations 44828 56071 81786

Consolidated Severance Pay 29230 52041 73661
Other Long-Term Liabilities 13900 24000 42000

TOTAL LIABILITY 370296 566594 924455

Paid Capital 25500 25500 25500

Reservations 61009 80187 129601
Benefits of Exercise 22238 52474 118226
Valuations 6047 6454 15446

HERITAGE 114794 164615 288773

TOTAL 485090 731209 1213228

FOOD PRODUCT FROM THE FIELD S.A.

FINANCIAL INDICATORS

YEAR 1 YEAR 2 YEAR 3

LIQUIDITY INDICATORS

Current ratio 1.03779512 1,09031674 1,06804052

Acid Test 0.71542265 0.76705364 0.74004

DEBT INDICATORS

Level of Indebtedness 0.5820322 0,59419673 0,59923444

Concentration of Indebtedness C.P.

Number of times interest is earned

Leverage Total
Leverage a C.P 2.45951879 2.6393828 2.51757609

Total Financial Leverage 2,850027 2,98000182 2,80079509

ACTIVITY INDICATORS

Portfolio Rotation 10.2718261 95,2390079 11,8255413

Average Cost Period 35.5340906 30,4906352 30,8653948

Inventory Turnover (Industrial Companies)

Total Inventory Turnover 6.50842301 7,96706829 6,64562707

Inventory Turnover 56.0811735 45,81359 54,9233347

Inventory Turnover
Work in Progress Product

Inventory Turnover 6.50842301 7,96706829 6,64562707

of Finished Products
56.0811735 45,81359 54,9233895

Rotation of Fixed Assets 6.87977213 8,8930484 7,28011289

Rotation of Operational Assets 39.2320818 49,81466 93,9945216

Total Asset Turnover 2.31774104 2.65720334 2.43239688

PROFITABILITY INDICATORS

Gross Profit Margin 27.7002045 26,0138211 32,1261706

Operating Margin (of Profit) 4,23876625 5.32313658

Net Margin (of Profit) 1.97791896 2,70070938 4,00623235

Return on Equity 19.3720926 31,8768035 40,9408082

Total Asset Performance 4.58430394 7.17633399

2. PAÑOS EL PRINCIPE S.A., a textile company located in Bogotá, is dedicated to
the production of cloths and blankets, participating in 5% of the production
national of these areas.

The main shareholders, worried about the difficult situation it has faced
what the Colombian textile sector has faced in recent years, especially in
the market aspects, they hired an analyst to carry out a study
about the financial situation of the company, for which they provide the statements
financial statements corresponding to years 1, 2, and the first semester of year 3.

The main questions from shareholders that the analyst must answer,
they are the following:

a. How has the company's liquidity evolved and why?

b. If the company sells its production with a 30-day term, it will be

recovering the wallet properly? Does this have any relation to
liquidity?

c. Does inventory turnover affect liquidity?

d. Is the level of indebtedness adequate? Is it being covered the

financial expenses? If the level of indebtedness is not convenient, why
What value should new shares be sold for to reach a percentage
acceptable?

e. If profitability has deteriorated, what have been the causes? How

Could they be improved?

f. Does the distribution of liabilities have any relationship with the situation of
liquidity? How could this process be improved?

Additional Data for the Calculation of Rotations

Inventario de Producto Terminado (Dic. Año 0) = 12300

Inventario de Producto en Proceso (Dic. Año 0) = 8100

Raw Material Inventory (Dec. Year 0) = 23500

The cost of direct labor and manufacturing expenses amounts to 10% and 5%
of the manufacturing cost, respectively.

AGRICULTURAL FOOD PRODUCT S.A.

GENERAL BALANCE
($ Miles)

ACTIVE YEAR 1 YEAR 2 YEAR 3

Cash 1371 987 -3172

Temporary Investments 25 25 25
Accounts Receivable 38233 28357 17525
Portfolio Provision -3399 -3399 -3399
Inventory - Finished Products 15294 19441 19441
Work in Progress Inventory 12106 7239 7239
Raw Material Inventory 28178 13534 11041
Merchandise in Transit 259 0 791
Other Current Assets 0 0 860

Current Asset 92067 66184 50351

Land, Buildings and Equipment 6946 7473 7473

Accumulated Depreciation -4053 -4466 -4896

Subtotal Fixed Assets 2893 3007 2577

Permanent Investments 919 882 798

Deferred Assets 1274 701 215
Other Assets 31673 32729 31817
Valuations 3169 3169 3169

TOTAL ASSETS 131995 106672 88927

PASSIVE

Banking Obligations 29070 30822 37567

National Suppliers 19972 8704 10354
Foreign Suppliers 15337 0 0
Current Portion Consolidated Severance 2339 4678 1300
Accumulated Expenses 4249 9512 14052
Income Tax Payable 2789 4523 569
Other Current Liabilities 5189 7957 10178

CURRENT LIABILITIES 78945 66196 74020

Long-Term Bank Obligations 12019 15050 0

Consolidated Severance Pay 4583 3119 0
Other Long-Term Liabilities 14351 13937 23690
 TOTAL LIABILITIES 109898 98302 97710

Paid Capital 8627 11983 12000

Reservations 5847 5980 5979
Appraisals 3169 3169 3169
Retained Earnings 0 0 -22671
Benefits of Exercise 1257 -22671 -17203
Valuations 3169 3169 3169

HERITAGE 22069 1630 -15557

TOTAL 131967 99932 82153

AGRICULTURAL FOOD PRODUCT S.A.

STATEMENT OF PROFIT AND LOSS
($ Miles)

January January - (January-

Dic)
YEAR 1 YEAR 2 YEAR 3
NET SALES 124828 127323 64500
Cost of Sales -104224 -111738 -56178
GROSS PROFIT 20604 15585 8322
Sales and Administrative Expenses -19684 -21288 -12555
OPERATIONAL UTILITY 920 -5703 -4233
Other Income 8124 3440 730
Other Expenditures -5703 -19839 -13350
Profit Before Tax 3341 -22102 -16853
Income tax provision -2084 -569 -350
UTILIDAD ANTES DE PARTIDAS EXT 1257 -22671 -17203
Extraordinary Items 0 0 0
USEFULNESS OF EXERCISE 1257 -22671 -17203

3. ELECTRODOMESTICOS DEL NORTE S.A. is engaged in the production and sale

of refrigerators, washing machines, dryers, water heaters, stoves, etc., in the
city of Cúcuta.

The participation of the previous products in the national market is

between 20% and 50% for each of the lines. These percentages could
they would be bigger if it weren't for the unfair competition from smuggling. Without

embargo, sales start to recover at the beginning of year 3, due to

that contracts have been signed to produce large quantities for entities
from the government, which is why good prospects for the future are presented.

The company is requesting from the Commercial Bank, of which it has been a client since

ten years ago, a short-term credit line for the amount of $200 million,
to be invested in working capital.

The bank has general information about the company and the statements.
financial for years 1, 2, and the first half of year 3, which must
to be reclassified according to the methodology used by the institution
credit. The officials who make credit decisions want
to form a criterion on the following aspects:

a) Company's situation regarding liquidity, indebtedness,

profitability, efficiency.

b) Impact of the new debt on liquidity and indebtedness of the

company.

c) Assuming that sales grow by 25% annually and that the structure of
Income and expenses continue, will the company be able to manage adequately?
financial expenses (assume an average rate of 28% for all the
banking obligations