Skip to Main Content
The Portable MBA in Finance and Accounting, 4th Edition
book

The Portable MBA in Finance and Accounting, 4th Edition

by Theodore Grossman, John Leslie Livingstone
October 2009
Beginner content levelBeginner
624 pages
21h 25m
English
Wiley
Content preview from The Portable MBA in Finance and Accounting, 4th Edition
1
Understanding Financial Statements
Les Livingstone

What Are Financial Statements? A Case Study

Gail was applying for a bank loan to start her new business: Nutrimin, a retail store selling nutritional supplements, vitamins, and herbal remedies. She described her concept to Hal, a loan officer at the bank.
Hal: How much money will you need to get started?
Gail: I estimate $80,000 for the beginning inventory, plus $36,000 for store signs, shelves, fixtures, counters, and cash registers, plus $24,000 working capital to cover operating expenses for about two months. That’s a total of $140,000 for the start-up.
Hal: How are you planning to finance the investment of $140,000 for the start-up?
Gail: I can put in $100,000 from my savings, and I’d like to borrow the remaining $40,000 from the bank.
Hal: Suppose the bank lends you $40,000 on a one-year note, at 15% interest, secured by a lien on the inventory. Let’s put together projected financial statements from the figures you gave me. Your beginning balance sheet would look like what you see on the computer screen:
Nutrimin
004
The left side shows Nutrimin’s investment in assets. It classifies the assets into “current” (which means turning into cash in a year or less) and “noncurrent” (not turning into cash within a year). The right side shows how the assets are to be financed: partly by the bank loan and partly by your equity as the ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Finance and Accounting for NonFinancial Managers, 3rd Edition

Finance and Accounting for NonFinancial Managers, 3rd Edition

Eliot H. Sherman
Corporate Finance, 5th Edition

Corporate Finance, 5th Edition

Pierre Vernimmen, Pascal Quiry, Maurizio Dallocchio, Yann Le Fur, Antonio Salvi

Publisher Resources

ISBN: 9780470526323Purchase book