Project

Banking techniques and operations for Business

Administration

Instructor: Assistant professor Madalina Moroianu

Authors: Izman Olga, Marcu Mihaela

Contents
Description of the loan.................................................................................................... 2
Description of the company............................................................................................ 2
Credit story..................................................................................................................... 3
Analysis of the market industry....................................................................................... 4
Financial Analysis of Borrower......................................................................................... 5
Cash flow (2015)............................................................................................................. 5
Collateral analysis........................................................................................................... 6
SWOT analysis................................................................................................................. 6
Risks................................................................................................................................ 7
Credit scoring.................................................................................................................. 7
Credit Decision................................................................................................................ 8
References...................................................................................................................... 9

Description of the loan

Type, amount, period: investment credit of 10,000 EUR (44200 RON) on a period of 3 years
for PIARTIK S.R.L..
Objective: the investment is needed for the (marketing department) promotion of the
companys site (services Google AdWords, Etarget, piatadelinkuri.ro, bursadereclama.ro); the
total amount needed is 13,000 EUR (57460 RON).
This promotion activity will be financed in the following way:
- 23% (3,000 EUR) will be paid by the client (15% from the value has already been paid as
advance money )
-77% (10,000EUR) through the requested credit
The credit will be guaranteed with an apartment in total area of 30 sq. situated in Bucharest. The
accepted value of the collateral is 18,700 EUR.
Till now all the companys investments were made from its own funds and had as objective the
self-development and growing from start-up in a stable company with its clientele. This led to
the increase of the notoriety of the company and an increase in the number of customers.
The reimbursement of the loan will be made monthly in equal installments, according to a
schedule previously decided by both parties.
The source of the reimbursement is the monthly cash flow of the company.

Description of the company

The company PIARTIK S.R.L. was founded in October, 2014. PIARTIK is a company who
owns their web site piartik.ro . To explain better how it should work we compare PIARTIK to an
agency. This site helps people who need the qualitative articles for their web sites meet and work
with the freelancers who are willing to sell them (or to execute after defined parameters) attractive
and interesting texts. After sale all the rights of owning and publishing transfers to the web master or
the person who owns the site. The companys profit will come from the commission which would be
paid by the web masters and also by the persons who implements the task. It is an activity based on
the freelancing but for Romanian speakers.
The company has two types of sources profit:

From its clients:

Web masters, who order the articles;

Writers; it means the freelancers, who write the ordered texts or who sell ready
articles.
From the promoters of the other websites and businesses (posting the ads on the site).

It is a start-up and it has a limited budget, that is why there are four employees who do all the
work. Three of the employees are the associates: Izman Olga 34%, Marcu Mihaela 33%, Alexandru
Dorobat 33%. Their activity consist of promoting, maintaining and solve the technical problems of
the site. In the company also works an accountant.
piartik.ro offers webmasters the following activities:
Rewriting.
This means that the writer who was accepted to do that kind of job should find an article with
the suitable topic and rewrite, i.e. retell it with proper words. Here writer should very careful
not to copy-past the information because we will verify uniqueness of the article. Because of
the simplicity of the work, every article will cost 3 RON (average article has 2000 characters).
Copywriting.
Here writer should write his own original article based on his experience or knowledge.
Because of the fact that to write an independent article is more difficult than to retell
somebodys, the price to it increase as 6 RON for article (2000 characters).
Translating.
The price for one translated articles is 12 RON (2000 characters).
And the articles can order not just the people who owns their own website, but also others
who needs some text like an essay, summary or translation.
The commission of the company will be 5-10% from each client and each order. It means
that not just the web master pays the commission, but also pays the writer.
The company has plans to grow into an independent web-studio, which will offer its clients
not just the well-written texts, which can sell, but also the whole set for creating and maintaining
their sites (building it and promoting).

Credit story
Banking Relationships
Till now PIARTIK hasnt had any relation with BCR.
The banks the company is working with are:
BANCA TRANSILVANIEI Current account

3,500EUR (15470 RON)

BRD

Current account

800EUR (3535 RON)

History of the Clients Loans

PIARTIK S.R.L. doesnt have any long-term loan, all the companys debts and investments being
made from its internal sources.
It has not leasing contracts.
Credit Information Bureau Database
According to the Credit Information Bureau statement, PIARTIK S.R.L. is not present in database
with any unpaid loans.
Payment Incident Bureau Database
According to the Payment Incident Bureau statement, PIARTIK S.R.L. is not present in database
with any incident.
Taxes, Social Insurance to State Budget
PIARTIK S.R.L. has paid all its debts to the state budget.

Analysis of the market industry

The company is a start-up in the business industry, which is still not explored by Romania
very well web-industry. That is why the biggest advantage is that this activity is something new in
the Romanian web industry. And it means that the company doesnt have direct competitors. But
there are some indirect competitors, for example English and Russian websites, who offer the same
services. Some of this type of competitors: etxt.ru, advego.ru, freelancer.com. Also there are other
type of indirect competitors like smartclick.net and others, which offers money for likes on
facebook, votes and clicks on the ads on the other web sites. But these competitors can be seen as an
advantage too. If a person is accustomed with making money through the internet, they would trust
more to this project and would
willing to try working.
Also, there is an increase
in users of the e-commerce,
and with years the number
will increase more. Where
will be demand, there will
appear the offer. So the
number of the web-sites with
the different services and
products will increase.

Financial Analysis of Borrower

Year

2014(RON)

2015(RON)

TURNOVER

3,093.86

6,629.7

NET PROFIT

1,077.5

2,786

EQUITY

3,535

5,745.74

TOTAL DEBT RATIO

CURRENT RATIO

1.1

1.25

OPERATING PROFIT

10.7%

11.8%

Cash flow (2015)

OPERATING CASH FLOW (direct method)
RON
Cash inflow from customers (+)

6,629.7

Cash outflows for suppliers, other

creditors and employees payment (-)

1025.42

Other cash outflow for operational

activity (-)

2818.28

OPERATING CASH FLOW

2,786

INVESTING CASH FLOW

INVESTING CASH FLOW

FINANCING CASH FLOW

Increases of capital in cash (+)

2,210.74

FINANCING CASH FLOW

2,210.74

TOTAL NET CASH FLOW

4996.74

Collateral analysis
The credit will be guaranteed with mortgage on an apartment in total area of 30 sq. situated in
Bucharest. The assets are owned by the associate of the PIARTIK S.R.L.
The market value of the collateral is 21,000 EUR. To this value the bank applies a risk coefficient of
12% resulting the accepted value of the collateral of 18,500 EUR
The value of the collateral cover the amount of the total loan agreement (the loan amount, the amount
of interest rate payable in the course of the 1st year), and the expenses related to the collateral enforcement .

SWOT analysis
Strengths

The innovative and promising idea of the business;

The industry of the activity with the a lot of opportunities;
The quick increase of the income and the number of clients;
The successful development of the business;
The entrepreneurial team with the needed skills and knowledge to perform in the field.

Weaknesses
The lack of experience of the management team;
The lack of the needed number of the employees;
The major expense of the business is the promotion and it is bigger than advisable 25% of
the profit.
Opportunities
Become the first site of the freelancing who can provide the labor contracts for the writers;
Become the first Romanian web-studio who can offer the whole set of services for creating,
maintaining and promoting the site;
Provide the job and opportunity to gain income for people who cant be hired for full time or
are forced to work from home.
Threats
The business can be seen in Romania as a fraud and wont be trusted;
The company wouldnt be able to find new webmasters which means it wouldnt be able to
provide jobs for the writers;
The advertisers wouldnt want post their ads on the site or they wont be satisfied by the flow
of the visitors on their sites.

Risks
Business Risk
Companys management doesnt have enough experience in this domain, but the company
extended its activity quickly and got some loyal customers.
Market Risk
The general economic growth in e-commerce influences positive the development of the
building site activity. It is an increase in sites which need texts which can sell. By investing more
in advertising, the company will increase its notoriety and will gain more clients, which will help
in maintaining its position on the market.
Repayment risk
Its companys first loan and there isnt a possibility to make an opinion about their
repayment experience. But the company is growing fast and it is an increase in income, so it is
sound very promising.

Credit scoring
Evaluation
criteria

Weight

Values

Mark

Evaluation

Management
quality, business
strategy,
collateral
received

21%

Promising
innovative
business idea,
fast growing
start-up

0.63

Ownership
structure

4%

The whole
capital is owned
by management
team

0.04

Current ratio

18%

1.25

0.54

Solvability: Total

18%

4.2

0.18

Qualitative criteria

Quantitative criteria

assets/total debts
Operating profit
margin:
Operating profit/
sales x 100

12%

11.8%

0.12

Interest cover:
Operating profit/
Interest expenses

18%

34.3

0.18

Equity ratio:
Equity / total
assets x 100

9%

80%

0.09

Client ratingfinancial
performance

100%

1.78 - A

Credit Decision
Not regarding that the company doesnt exist much time and doesnt have enough
experience, and it is its first credit; but its financial performance shows that the PIARTIK S.R.L. is a
good candidate for the credit.

References

1
2

Dima.M. A (2013). Banking for Business Administration. Theory, cases and applications, Ed ASE
(ASE bookshop)
Dima, M.A., (2010), Credit Analysis. Case studies, Ed. Business Excellence
3

Casu, B., Giraradone, C., Molyneux (2006). Introduction to Banking, Prentice Hall

Mishkin, F. (2007). The Economics of Money, Banking and Financial Markets, Prentice Hal

http://www.investopedia.com/terms/o/operating_profit.asp

http://www.investopedia.com/terms/c/currentratio.asp

http://www.investorwords.com/1631/EBIT.html

http://www.cursbnr.ro/

9 M. R. Baye and D. W. Jansen, Money, Banking and Financial Markets, AITBS, 1996
10 Rakesh Mohan, Growth with Financial Stability - Central Banking in an Emerging Market,
Oxford University Press, 2011