This preview shows page 1. Sign up to view the full content.
Unformatted text preview: roblem Account?
When a borrower account remains “substandard”
When for a reasonable period of time, say 6 months due
non-payment of principal & interest
failure of borrower to comply with the terms and
failure conditions of the credit facility
erosion in net worth by 50% due to losses during the
previous accounting year
previous PROBLEM IDENTIFICATION
Causes for Problem(s)
Warning symptoms/signals of problem(s)
Symptoms from financial statements
Symptoms from company management
Symptoms from bank records CAUSES OF PROBLEMS
Inefficient Management autocratic or dictatorial style
substantial increase in business beyond
substantial the capacity & resources of borrower
substantial increase in creditors & debtors
Inadequate equity & working capital to
Inadequate support increase in business
Overtrading usually misinterpreted as
Overtrading business success
business Poor planning & strategy
business overtaken by competitors
business and now left with out...
View Full Document
This note was uploaded on 10/19/2012 for the course FINANCE 20873 taught by Professor Mavis during the Spring '12 term at École Polytechnique.
- Spring '12