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Corporate Finance 5

Corporate Finance 5 - Internal Management are they...

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Sophisticated Petites Sunday, October 10, 2010 9:33 PM Issue: want to increase their loan by 70k to finance leasehold improvements Should the loan be made? Criteria: minimize risk of not being paid back Maximize profits If deciding to give the loan: Amount? What type? Collateral? Covenants? (ie cant use the money to increase salaries, etc) What are the rates and fees? Will you monitor the health of their company? Implicitly, we are sizing-up the situation External Economy-recession Industry-high-end boutique
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Unformatted text preview: Internal Management- are they compotent managers Marketing Operations Financials Do they really need the 70k Forecasting Income statement B/S-assets Liabilities Equity "PLUG" Days in A/P =AP/(CGS/365) or A/P/(Purchases/365) 75=A/P/(Purchases/365) Purchases =CGS+ end inv-beg inv 1332=1200+400-268 Financing Gap Calculated in Excel= 56k Company does not need 70k but rather 56k="PLUG" Financing is necessary because the company is growing and there is a financing gap...
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