Comparison with Industry Averages Midwest Inc. is a medium-size company that has been in business… 1 answer below »

Comparison with Industry Averages Midwest Inc. is a medium-size company that has been in business… 1 answer below »

Comparison with Industry Averages

Midwest Inc. is a medium-size company that has been in business for 20 years. The industry has

become very competitive in the last few years, and Midwest has decided that it must grow if it is

going to survive. It has approached the bank for a sizable five-year loan, and the bank has

requested Midwest’s most recent financial statements as part of the loan package.

The industry in which Midwest operates consists of approximately 20 companies relatively

equal in size. The trade association to which all of the competitors belong publishes an annual

survey of the industry, including industry averages for selected ratios for the competitors. All

companies voluntarily submit their statements to the association for this purpose.

Midwest’s controller is aware that the bank has access to this survey and is very concerned

about how the company fared this past year compared with the rest of the industry. The ratios

included in the publication and the averages for the past year are as follows:

 

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