Loan Recommendation
To arrive at your recommendation, analyze the financial performance of the requesting company and present it to your organization’s upper-management team. The management team will take your recommendation into consideration as they finalize loan requests.
Analyze the company’s performance and performance trends. Include the following in your analysis:
- Analyze the trend for accounts receivable collections.
- Identify the trend.
- Explain the relevance of the trend.
- Determine if the trend is improving or getting worse.
- Compare the company’s average inventory turnover to the industry average inventory turnover rate. Note that the average industry turnover rate for Ace Company is 10 times per year.
- Consider whether the company’s average inventory turnover is higher or lower than the industry average.
- Explain whether a higher or lower average is better.
- Determine whether the trend is improving or getting worse.
- Evaluate the company’s short-term and long-term credit worthiness based on financial performance and trend (comparing this year to last year). Include in your evaluation:
- Information about performance and trends.
- Information about other relevant financial information you consider important to the decision.
- Your recommendation regarding whether the bank should grant the loan based on the financial data.
Deliverable Format
The management team of your organization requests this information in the form of a 1–2 page executive summary along with a title page, references page, and appendix of supporting information. The executive summary must highlight the key findings from your review and will provide your recommendation and rationale. The appendix must include data used in your analysis for others to review. Assume that this document is the only communication in regard to your analysis and recommendation and that you will not be with the team to explain anything as it deliberates. In other words, the documentation you provide must be well organized and include information for the management team to clearly see your recommendation and rationale.