Springfield National Bank
Issues
1. Appraise the recent performance and financial position of Dawson Stores, Inc., using selected financial ratios as appropriate (Horizontal and Vertical analysis)
2. As Stefanie Anderson, would you conclude that the company is a good credit risk? If not, provide recommendations to the client on how to solve their issues.
Facts
Dawson Stores, Inc. was incorporated in 1881 by John Dawson Sr. After his death, tge stock had been widely spread since he divided his share among his five children and 14 grandchildren. John Dawson Jr. is now the president of Dawson Stores, Inc. His brother, Bill, is the Vice-president and Treasurer, and their two sisters and two cousins were the directors and officers.
Dawson Stores, Inc. is a long time deposit custome of Springfield National Bank; since the years Dawson Sr. managed the company. Dawson Jr. is now requesting an unsecured line of credit of $1,000,000 for one year term. To support the company’s application, Mr. Dawson Jr. submitted the financial statements to the bank for the last four years. When Stefanie Anderson, the loan officer, received the financial statements along with previous bank records and she found the follow information:
The deposit accounts at Springfield National Bank had average balances of $350,000 for the past year. Dawson Stores, Inc. occasionally purchased Certificates of Deposit for short periods.
The Company had not used bank credit in the last 10 years. A Recent Dun & Brandstreet (D&B) report requested by a business development officer reported all trade accounts satisfactory.
Dawson Stores, Inc. operated seven stores for the past six years. All store locations have been modernized frequently, and the call report from the business development officer reported the premises orderly and well located for this chain of small retail stores. All seven stores were located within the trade area. In the opinion of the business development officer, there was little possibility for
1. Appraise the recent performance and financial position of Dawson Stores, Inc., using selected financial ratios as appropriate (Horizontal and Vertical analysis)
2. As Stefanie Anderson, would you conclude that the company is a good credit risk? If not, provide recommendations to the client on how to solve their issues.
Facts
Dawson Stores, Inc. was incorporated in 1881 by John Dawson Sr. After his death, tge stock had been widely spread since he divided his share among his five children and 14 grandchildren. John Dawson Jr. is now the president of Dawson Stores, Inc. His brother, Bill, is the Vice-president and Treasurer, and their two sisters and two cousins were the directors and officers.
Dawson Stores, Inc. is a long time deposit custome of Springfield National Bank; since the years Dawson Sr. managed the company. Dawson Jr. is now requesting an unsecured line of credit of $1,000,000 for one year term. To support the company’s application, Mr. Dawson Jr. submitted the financial statements to the bank for the last four years. When Stefanie Anderson, the loan officer, received the financial statements along with previous bank records and she found the follow information:
The deposit accounts at Springfield National Bank had average balances of $350,000 for the past year. Dawson Stores, Inc. occasionally purchased Certificates of Deposit for short periods.
The Company had not used bank credit in the last 10 years. A Recent Dun & Brandstreet (D&B) report requested by a business development officer reported all trade accounts satisfactory.
Dawson Stores, Inc. operated seven stores for the past six years. All store locations have been modernized frequently, and the call report from the business development officer reported the premises orderly and well located for this chain of small retail stores. All seven stores were located within the trade area. In the opinion of the business development officer, there was little possibility for