Loan Amount The amount of credit required depends on the use of the proceeds and the availability of internal sources of funds. Borrowers often ask for too little in requesting a loan and return later for more funds. 猫的资6+孝
Loan Amount Loan Amount The amount of credit required depends on the use of the proceeds and the availability of internal sources of funds. Borrowers often ask for too little in requesting a loan and return later for more funds
Primary source and timing of repayment Loans are repaid from cash flows. Four basic sources of cash flows: Liquidation of assets Cash flow from normal operations ■New debt issues ■New equity issues 麓行黄事大考
Primary source and timing of Primary source and timing of repayment repayment Loans are repaid from cash flows. Four basic sources of cash flows: Liquidation of assets Cash flow from normal operations New debt issues New equity issues
Collateral Collateral is the security a bank has in assets owned and pledged by the borrower against a debt in the event of default. Liquidating collateral is clearly a second best source of repayment for three reasons: There are significant transactions costs associated with foreclosure.(Time,money. Bankruptcy laws allow borrowers to retain possession of the collateral long after they have defaulted. 爸封强的黄香+孝
Collateral Collateral Collateral is the security a bank has in assets owned and pledged by the borrower against a debt in the event of default. Liquidating collateral is clearly a second best source of repayment for three reasons: There are significant transactions costs associated with foreclosure. (Time, money.) Bankruptcy laws allow borrowers to retain possession of the collateral long after they have defaulted
What can be collateral? Virtually any assets,or the general capacity to generate cash flow,can be used as collateral. Collateral must exhibit three features: Its value should always exceed the outstanding principal on a loan. a lender should be able to easily take possession of collateral and have a ready market for sale. 麓封强的黄香+孝
What can be collateral? What can be collateral? Virtually any assets, or the general capacity to generate cash flow, can be used as collateral. Collateral must exhibit three features: Its value should always exceed the outstanding principal on a loan. A lender should be able to easily take possession of collateral and have a ready market for sale
Evaluation:A four-part process The purpose of credit analysis is to identify and define the lender's risk in making a loan. ▣Four-part process: ■ Overview of management,operations,and the firm's industry ■ Common size and financial ratio analysis ■ Analysis of cash flow Projections and analysis of the borrower's financial condition 麓的贫香小手
Evaluation: A four Evaluation: A four -part process part process The purpose of credit analysis is to identify and define the lender’s risk in making a loan. Four-part process: Overview of management, operations, and the firm’s industry Common size and financial ratio analysis Analysis of cash flow Projections and analysis of the borrower’s financial condition