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Hanson Case

In: Business and Management

Submitted By wwt1012
Words 1242
Pages 5
Hanson&Ski&Products&Case&Write3Up&
&
Question& 1:& Using& the& concept& of& balance& sheet,& I& prepared& the& balance& sheet& on&
Exhibit&1.&I&estimate&that&the&size&of&the&commercial&bank&loan&will&be&$1,650,000&on&Mar&
31,&1987.& At&that&time,&the&collateral&will&be& $2,701,100&(collateral=&1741*&80%+&1869*&
70%=2,701,100).& Comparing& with& the& Note& Payable33Banks& account,& $1,650,000,& the& collateral&is&greater&than&Note&Payable3Bank.& Additionally,& Note&Payable—Banks&is&less& than&$4,200,000.&Therefore,&the&budget&plans&are&feasible.& &
Question& 2:& The&idea&to&calculate&the&Note& payable& size&is&that&the&company&had&to& balance&its&cash&account&to&$100,000,&meaning&that&whenever&the&cash&account&was&less& than& $100,000,& the& company& would& borrow& money& to& keep& to& $100,000.& On& the& other& hand,& the& company& would& repay& to& the& banks& if& its& cash& account& was& more& than&
$100,000.& For& example,& on& Quarter& 1,& the& cash& account& was& debited& $1,643,000&
(156,000+1,487,000)& and& was& credited& $2,172,000(1,928,000+177,000+67,000).& To& balance& the& cash& account& to& $100,000,& the& company& needed& to& borrow& $629,000& from& commercial&banks.&Using&the&same&idea,&I&prepared&the&T3account&for&Cash&account&on& Exhibit&2.& Based&on&the&Exhibit&2,&and&Exhibit&3,&the&size&of&the&commercial&bank&loan&at& the& end& of& quarter& of& FY& 1987& was& respectively& $2,176,000& in& Q1,& $3,727,000& in& Q2,&
$3,041,000& in& Q3& and& $1,650,000& in& Q4.& Apparently,& the& company& can& stay& within& the& commercial&bank’s&line&of&credit&of&$4,&200,000.& The&highest&Note&Payable—Banks&took& place&in&Q2&that&still&was&less&than&$4.2&million.& &
&

Quarter&
80%3Receivable$& 70%3Inventories$& Note3Payable33Banks$&
1&
405,600&
1,965,600&
2,176,000&
2&
3,664,000&
1,183,000&
3,727,000&
3&
3,791,200&
816,200&…...

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