FINA 4343 Credit Analysis Case Study 1
1. Utilize the narrative, the Financial Statements, and the Industry Averages of Key Ratios. Prepare your own Financial Statements within Excel with embedded formulas. All of the critical information is there.
2. Conduct your Group’s Credit Analysis by addressing each item from the previously provided Underwriting Handout. Please include both historical and projected statements of cash flows, and EBITDA. It should also include the key Fixed Charge Coverage ratio. This qualitative portion along with your in-depth understanding of the Excel Workbook Financial Statements will enable your group (Loan Officers) to present your findings and your opinions on granting or declining the loan requested by Anandam Manufacturing to the Mock Loan Committee made up of Professor Lara and potentially your peers.
3. Clearly identify:
a. How much does Anandam Manufacturing need to borrow?
b. What will the loan proceeds to be used for?
c. What is the primary source of repayment?
d. Are there secondary sources?
i. Inventory, A/R, Fixed Assets (PP&E)
ii. Are Appraisals of Collateral required?
e. Tertiary sources?
ii. Federal Tax Returns
f. What covenants if any would you require?
g. Are there working capital, term, bridge, hybrid or other commercial loan type applications?
4. Make recommendations on terms and conditions that our Bank can impose/require of Anandam Manufacturing to implement to secure the repayment of the credit. Consider loan covenants, lender requirements and/or modified requests.
Your Presentation should be presented on PowerPoint with all group members speaking and explaining as part of the group. Embedded Excel Spreadsheets and graphics are required. The qualitative & quantitative portions of your case study should be printed for distribution to both Professors at the time of your presentation and emailed prior to the beginning of class.
Resources to be utilized in group credit analysis:
Exhibits 12.3, 12.5, 13.8, 13.12 & 13.13
Chapter 14 PowerPoint Slide 2, Appendix I, Financial Ratios.
Types of Commercial Bank Offered Financing handout.
Commercial Loan Underwriting handout. Identify which items apply and how they relate to the Borrower.
Cash Flow Analysis. Cash-to-Cash Cycle.
Include Graphs & Charts.
Borrower as compared to their Competition.
Address 5 C’s of Credit.
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