You are a Corporate Credit Analyst for your bank. A new corporate customer in the manufacturing sector approached your bank for a large credit facility in the sum of $20 million for production equipment and warehousing. The customer submitted the following financials to you. List two strengths and two weaknesses of the borrower in relation to credit. Year Ended30-Sept-1930-Sept-2030-Sept-21Assets ($)Current AssetsCash And Cash Equivalents6,714,0004,851,00015,982,000Short Term Investments27,447,00032,900,00044,610,000Net Receivables11,256,0008,881,0007,987,000Inventory1,478,000491,000421,000Other Current Assets2,115,0001,614,0001,566,000Total Current Assets49,010,00048,737,00070,566,000Long Term Investments9,232,00011,004,00012,210,000Property Plant and Equipment3,044,0002,346,00012,326,000Goodwill3,866,0003,309,0003,115,000Intangible Assets539,000499,000569,000Accumulated AmortizationOther Assets3,906,0004,920,0003,603,000Total Assets69,597,00070,815,000102,389,000

Year Ended 30-Sept-19 30-Sept-20 30-Sept-2 Assets ($) Current Assets Cash And Cash Equivalents 6,714,000 4,851,000 15,982,000 44,610,000 7,987,000 Short Term Investments 27,447,000 32,900,000 Net Receivables 11,256,000 8,881,000 Inventory 1,478,000 491,000 421,000 Other Current Assets 2,115,000 1,614,000 1,566,000 Total Current Assets 49,010,000 48,737,000 70,566,000 Long Term Investments 9,232,000 11,004,000 12,210,000 Property Plant and Equipment 3,044,000 2,346,000 12,326,000 Goodwill 3,866,000 3,309,000 3,115,000 Intangible Assets 539,000 499,000 569,000 Accumulated Amortization Other Assets 3,906,000 4,920,000 3,603,000 Total Assets 69,597.000 70,815,000 102,389,000

Year Ended 30-Sept-19 30-Sept-20 30-Sept-2 Assets ($) Current Assets Cash And Cash Equivalents 6,714,000 4,851,000 15,982,000 44,610,000 7,987,000 Short Term Investments 27,447,000 32,900,000 Net Receivables 11,256,000 8,881,000 Inventory 1,478,000 491,000 421,000 Other Current Assets 2,115,000 1,614,000 1,566,000 Total Current Assets 49,010,000 48,737,000 70,566,000 Long Term Investments 9,232,000 11,004,000 12,210,000 Property Plant and Equipment 3,044,000 2,346,000 12,326,000 Goodwill 3,866,000 3,309,000 3,115,000 Intangible Assets 539,000 499,000 569,000 Accumulated Amortization Other Assets 3,906,000 4,920,000 3,603,000 Total Assets 69,597.000 70,815,000 102,389,000

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 8EP

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Question

You are a Corporate Credit Analyst for your bank. A new corporate customer in the manufacturing sector approached your bank for a large credit facility in the sum of $20 million for production equipment and warehousing. The customer submitted the following financials to you.

List two strengths and two weaknesses of the borrower in relation to credit.

Year Ended
30-Sept-19
30-Sept-20
30-Sept-21
Assets ($)
Current Assets
Cash And Cash Equivalents
6,714,000
4,851,000
15,982,000
Short Term Investments
27,447,000
32,900,000
44,610,000
Net Receivables
11,256,000
8,881,000
7,987,000
Inventory
1,478,000
491,000
421,000
Other Current Assets
2,115,000
1,614,000
1,566,000
Total Current Assets
49,010,000
48,737,000
70,566,000
Long Term Investments
9,232,000
11,004,000
12,210,000
Property Plant and Equipment
3,044,000
2,346,000
12,326,000
Goodwill
3,866,000
3,309,000
3,115,000
Intangible Assets
539,000
499,000
569,000
Accumulated Amortization
Other Assets
3,906,000
4,920,000
3,603,000
Total Assets
69,597,000
70,815,000
102,389,000

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