Questions:
1. Calculate Gillian Pool and Spa Supplies' average annual compound growth rate of sales, and analyze its earnings performance for the past five years.
2. In order to shed some light on the firm's financial condition, which statements should Denny analyze, and which measures/calculations should he use to compile a detailed report? Please explain why.
3. Realizing that comparison with an appropriate benchmark is a key component of comprehensive ratio analysis, how should Denny go about finding a suitable benchmark?
4. While attending his MBA finance class, Denny had learned that doing a common size analysis and a DuPont analysis are very useful first steps when analyzing a company's health. Using the five-year financial statements, help Denny perform such analyses. Comment on the findings.
5. Analyze Gillian Pool's liquidity, asset utilization, long-term solvency, and profitability ratios. What arguments would have to be made to convince the bank that it should grant Gillian Pool & Spa Supplies the loan?
6. If you were the commercial loan officer Andy approached for a short-term loan of $50,000, what would your decision be? Why?
7. What recommendations should Denny make to Andy for improvement, if any?
8. What kinds of problems do you think Denny would have to cope with when conducting a comprehensive financial statement analysis of Gillian Pool & Spa Supplies? What are the limitations of financial statement analysis in general?
