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07 Activity 1

The document provides a scenario where Shark Loans received a request for a construction loan from Wendy Services Inc. Students are asked to use a P-M-I (Plus, Minus, Interesting) chart to analyze Wendy Services' balance sheet and income statement and recommend which financial statement Shark Loans should use to decide whether to approve or reject the loan request. Based on the P-M-I analysis, the student recommends that Shark Loans use the statement of financial position because it provides better information about Wendy Services' asset and liability position and overall financial integrity, whereas the income statement only provides a short-term perspective.

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Angel Binlayo
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114 views

07 Activity 1

The document provides a scenario where Shark Loans received a request for a construction loan from Wendy Services Inc. Students are asked to use a P-M-I (Plus, Minus, Interesting) chart to analyze Wendy Services' balance sheet and income statement and recommend which financial statement Shark Loans should use to decide whether to approve or reject the loan request. Based on the P-M-I analysis, the student recommends that Shark Loans use the statement of financial position because it provides better information about Wendy Services' asset and liability position and overall financial integrity, whereas the income statement only provides a short-term perspective.

Uploaded by

Angel Binlayo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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P-M-I CHART

Instruction: Respond to the scenario below by using the P-M-I Chart. Write your answers in the

spaces provided. (20 points)

• In the Interesting box, write some facts about the specific financial statement.

Scenario: Shark Loans received a request for a construction loan from Wendy Services Inc. This

construction loan will be used to build their fifth branch in Pasay. The company submitted its

balance sheet and income statement. Help Shark Loans choose which financial statement they

would use as a basis on whether they will accept or reject Wendy Services Inc.'s request. Refer

to Page 2. Justify your decision.

Response 1: Statement of Financial Position

PLUS MINUS

- Cash in 200B is equal to or greater - While it is not a good thing for 200A,

than cash in 200A in terms of assets. the disadvantages of 200B's assets

- The total assets of 200B exceed or and accounts receivable are less

surpass those of 200A. severe than those of 200A.

- Accounts Payable of 200B exceeds

200A in liabilities. The interest is high

if 200B's accounts payable exceed

200A's.

- It doesn't have as much equipment in

200B as there is in 200A, which is a


downside.

INTERESTING

- It's remarkable to observe that 200B's capital is 332,640.00, whereas 200A's capital is

166,320.00, putting 200B's capital higher than 200A's.

- Also know that the office equipment in 200A is less expensive than that in 200B.

Response 2: Income Statement

PLUS MINUS

- In terms of revenue, 200B is greater - 200A has lower revenue than 200B.

or higher than 200A. - 200B has a lower net income than

- A total of 200A and 200B is stated in 200A does.

both totals.

- 200B has a higher net income than

200A.

INTERESTING

- It is encouraging to find that income for 200B is higher than revenue for 200A, but

expenses are the same for both 200A and 200B.

MY DECISION

The company shall determine the reasons for its acceptance or rejection of Wendy Services

Inc.'s request by reference to its statement of financial situation. Due to the Statement of
Financial Position, which is considered by businesses like those that offer loans and provides

good or better information about the company's assets and liabilities position as well as a

look or perspective on Wendy Services' integrality position or liquidity, the income statement

of Wendy Services is very precipitate in comparison.

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