Solution-Evaluating loan request from michael hill

Evaluating loan request from michael hill international ltd

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Reference no: EM131665420

Question: Common-size Balance Sheet

Common-size Balance Sheet of Michael Hill International Ltd for the years 2014 and 2015:

Particulars	2015 $000	% of total	2014 $000	% of total
ASSETS
Current assets
Cash and cash equivalents	6797	1.94	8109	2.39
Trade and other receivables	24859	7.08	25143	7.40
Inventories	182232	51.92	179280	52.76
Current tax receivables	11376	3.24	61	0.02
Other current assets	3143	0.90	-	-
Total current assets	228407	65.07	212593	62.56
Non-Current assets
Trade and other receivables	636	0.18	480	0.14
Property plant and equipment	64845	18.47	55400	16.30
Deferred tax assets	48381	13.78	62324	18.34
Intangible assets	6491	1.85	6413	1.89
Other non-current assets	2253	0.64	2608	0.77
Total non-current assets	122606	34.93	127225	37.44

Total assets	351013	100	339818	100

LIABILITIES
Current liabilities
Trade and other payables	43739	12.46	42034	12.37
Provisions	4624	1.32	4235	1.25
Deferred revenue	21516	6.13	24736	7.28
Total current liabilities	69879	19.91	71005	20.90
Non-Current liabilities
Borrowings	45116	12.85	56000	16.48
Provisions	4254	1.21	1740	0.51
Deferred revenue	44143	12.58	29788	8.77
Total non-current liabilities	93513	26.64	87528	25.76
Shareholder's Equity
Contributed equity	3760	1.07	3651	1.07
Reserves	7445	2.12	5796	1.71
Retained earnings	176416	50.26	171838	50.57
Total Shareholder's Equity	187621	53.45	181285	53.35

Total liabilities	351013	100	339818	100

Common-size Income Statement of Michael Hill International Ltd for the years 2014 and 2015:

Particulars	2015 $000	% of total	2014 $000	% of total
Revenue from operations	503370	99.55	483935	99.84
Other income	2295	0.45	764	0.16
Total revenue	505665	100	484699	100
Cost of goods sold	-181135	-35.82	-173504	-35.80
Employee benefit expenses	-130937	-25.89	127010	26.20
Occupancy cost	-50640	-10.01	-47287	-9.76
Marketing expenses	-31906	-6.31	-26818	-5.53
Selling expenses	-22748	-4.50	-23203	-4.79
Depreciation and amortization expense	-15738	-3.11	-13070	-2.70
Loss on disposal of Property plant and equipment	-204	-0.04	-1133	-0.23
Other expense	-30211	-5.97	-30463	-6.28
Finance cost	-4708	-0.93	-5436	-1.12
Profit before income tax	37402	7.40	36775	7.59
income tax expense	-9648	-1.91	-11734	-2.42
Profit for the year	27754	5.49	25041	5.17
Other comprehensive income
Cash flow hedges	-491	-0.10	-277	-0.06
Currency diff.arising during the year	2115	0.42	4239	0.87
Total comprehensive income for the year	29378	5.81	29003	5.98

(a) Assume you are a banker evaluating a loan request from Michael Hill International Ltd for $50 million. What would be your concerns when making a decision regarding approval or denial of the loan request? Justify.

Reference no: EM131665420

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Evaluating loan request from michael hill international ltd

Reference no: EM131665420

Reference no: EM131665420

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