Although the case is titled Quality Furniture Company, it is really about Lloyds, Inc. Your analysis should be about
Lloyds. Confine your work to Lloyds only—do not do Quality Furniture itself.
2. Start by computing cash flow statements, financial ratios (use the note on financial ratios for equations and formatting),
and common-size income statements. Use net sales for all ratio and common-size computations requiring sales. When you do cash
flow statements do not combine any balance sheet accounts (e.g., all short-term debt or all long-term debt), show each
separately. Analyze intensively the balance sheet and income statements of Lloyds, Inc. using your computational results.
3. Due from stockholders is a loan by the business to stockholders.
4. Exhibit 3 is the aging of Quality Furniture Company’s accounts receivable to Lloyds, Inc. Lloyd’s income statement stops
at net profit before tax. Treat that as net income in all of your calculations.
5. How strong is the company’s balance sheet? How about its income statement? Why?
6. How might Quality Furniture Company’s trade credit evaluation of Lloyds, Inc. differfrom a commercial bank’s evaluation of
the company?
7. What action should be taken by the credit department of Quality Furniture Company?
