Performance evaluation Ace Company
Ace Company Data has been looking to increase their production by having interest in purchasing production equipment and develop accompanying software. The company is seeking a loan for $3 million 10-year loan to cover the items they are seeking, to have the company flourish. With the company success as of late, I recommend going forward with offering Ace Company Data a loan. To gain control of the situation, the loan would need to be at least 4%.
Looking over Ace Company balance sheet, I was able to discover that the company made a fair increase in their asset from 2016 to 2017 by $2,047,000. Once the liabilities are taking into account, Ace Company Data earned $6,747,000 in 2017 alone. Seeing that the company is having continuous growth since 2015 with their accounts receivable being $3,800,000. Over that timeframe, the company seemed to have recognized the inflation in capital (Bennouna, Meredith, & Marchant, 2010). With the 4% interest on the loan, Ace Company Data would be looking at a monthly expense of $30,373.54. As you can see with the $6 million figure from December 2017, it is within their budget to make the 120 payments with the monthly APR. Therefore the return on invest (ROI) for us will be great, with the secured interest in our favor (Marshall, 2017).
As you can see, offering Ace Company Data the loan will work out. The company has proved that they have the funds in place to pay it back. But it will need to be watched over the 10-year span, just in case something happens with the company (i.e. going out of business). If the final option will need to be to offer a loan incentive, incase of any hiccups occur.
Bennouna, K., Meredith, G. G., & Marchant, T. (2010). Improved capital budgeting decision making: evidence from Canada. Retrieved from ProQuest: https://search-proquest-com.library.capella.edu/docview/193519659?accountid=27965
Marshall, D. M. (2017). Accounting: What the numbers mean. New York, NY.
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