Beruflich Dokumente
Kultur Dokumente
17-2
Key Topics
Types of Business Loans: Short-Term and Long-Term Analyzing Business Loan Requests Collateral and Contingent Liabilities Sources and Uses of Business Funds Pricing Business Loans Customer Profitability Analysis (CPA)
17-3
17-4
17-5
17-6
17-7
17-8
17-9
Operating Efficiency
Annual Costs of Goods Sold/Average Inventory Average Receivables Collection Period Net Sales/Net Fixed Assets Net Sales/Total Assets Net Sales/Accounts Receivables
17-10
Gross Profit Margin=(Net SalesCGS)/Net Sales Net Profit Margin=Net Income After Taxes/Net Sales
17-11
Coverage Measures
Interest Coverage Coverage of Interest and Principal Payments
17-12
Liquidity Measures
Current Assets/Current Liabilities Acid Test Ratio Working Capital Net Liquid Assets
17-13
Profitability Measures
Before Tax Net Income/Total Assets After Tax Net Income/Total Assets Before Tax Net Income/Net Worth After Tax Net Income/Net Worth
17-14
17-15
17-16
17-17
17-18
17-19
17-20
Methods Used to Price Business Loans Cost-Plus Loan Pricing Method Price Leadership Model Below Prime Market Pricing Customer Profitability Analysis
17-21
17-22
17-23
Prime Rate
Major Banks Established a Base Lending Fee During the Great Depression. At that Time It Was the Lowest Interest Rate Charged Their Most Credit Worthy Customers for Short-Term Working Capital Loans
17-24
LIBOR
The London Interbank Offer Rate. The Rate Offered on Short-Term Eurodollar Deposits With Maturities Ranging From a Few Days to a Few Months
17-25
Interest Cost Markup of Borrowing = + for Risk in the Money and Profit Market
17-26
17-27
Quick Quiz
What aspects of a business firms financial statements do loan officers and credit analysts examine carefully? What methods are used to price business loans? Suppose a bank estimates that the marginal cost of raising loanable funds to make a $10m loan to one of its corporate customers is 4%, its nonfunds operating costs to evaluate and offer this loan are 0.5%, the default-risk premium on the loan is 0.375%, a term-risk premium of 0.625% is to be added, and the desired profit margin is 0.25%. What loan rate should be quoted this borrower? How much interest will this borrower pay in a year?
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.