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AREC 342 Assignment \#2 Balance Sheet Construction and Analysis Name: Rachel Rancher has applied for a loan. Her banker, Bob Banker, says the old balance sheet ance 13. Other Information 1) Has paid in advance for $6,000 worth of feed in order to get a good price on it. The feed will be delivered in May. 2) Income and social security taxes on last year's income is estimated at $7,200. NOTE: All calculations should be done on both cost and market basis where applicable 1. What is Rachel's owner's equity as of February 15? Answer (cost) Answer (market) 2. How much working capital does Rachel have? Answer 3. What is her current ratio? Answer 4. What is her debt/asset ratio? Answer (cost) Answer (market) 5. What is her debt/equity ratio? Answer (cost) Answer (market) 6. What is her equity/asset ratio? Answer (cost) Answer (market) 7. Assume yoa are a financial consultant hired by Rachel to analy as her finaneial condition. Based on this balance sheet, what part of her finaneial eondition is most in need of improvement? WHY? 8. Rachel wants to borrow $150,000 from the bank to buy additional beef breeding cows. They will cost $150,000. The tems of the loan are 5 years at 7.5% interest. The first payment is due in February 2024. Acerued interest for 2023 will increase by $800. Assume the loan is made, the cows are purchased. a) What will Rachel's owner's equity be immediately after the transactions are completed if there are no other changes on her balance sheet? Answer b) What will her debt/asset ratio be? Answer c) What will be her debt/equity ratio be? Answer 9. If you were Bob Banker, would you loan Rachel the money? Why or why not

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