You after graduation from UNLV ended up working for a venture capital firm in th
ID: 1216851 • Letter: Y
Question
You after graduation from UNLV ended up working for a venture capital firm in the Bay Area. Based on your technical skills with your engineering degree, your manager frequently has you assess whether or not to invest in start-up technology ventures. Is ACME 3-D Printing on sound financial footing based on the following below financial data? Justify your reasoning. Could ACME do anything to improve their chances of getting a loan? ACME 3-D Printing Balance Sheet April 30, 2016 Cash $100,000 Accounts payable $1,950,000 Stock mutual funds $150,000 Notes payable $5,500,000 Accounts receivable $3,200,000 Long-term debt $5,750,000 Inventories $1,500,000 Building mortgage $6,450,000 Factory/office building $15,500,000 Common stock $15,000,000 Net fixed assets $14,500,000 Retained earnings $300,000 Total assets $34,850,000 Total liab & equity $34,850,000Explanation / Answer
Looking at the balance sheet, they are not at good financial footing. Their cash position is not good.
To increase their chances of getting loans, they should improve their cash position by reducing the account payable. Also their D/E ratio is 0.74 so they should try and increase owner's equity
Debt to Total Asset 0.32
Debt to Total Fixed Asset 0.38
Debt to Equity Ratio 0.74
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