Lecture 10 Problem Accounts & Tutorial Q Upload Version

G new product launch diversification expansion

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: g that is large compared An with the resources of borrower e.g. new product launch, diversification, expansion product Over-gearing Interest on borrowing is a ‘fixed’ cost Interest whereas dividends on equity are ‘variable’ whereas High gearing + recession = difficulties / failure ANALYSIS OF PROBLEM LOANS Determine actual CAUSE of the problem Determine Consider if problem can be corrected in the near Consider future future Observe the attitude of other creditors without Observe arousing suspicion arousing Re-examine the viability of the business By conducting interviews with company's staff and By management, site visit & evaluation of accounting data data Check value of collateral (market & forced sale Check value) value) Appoint professionals, usually professional Appoint accountants, to review viability of business accountants, review of financial position as of a recent date, review probably latest management accounts probably then concentrate FORWARDS than BACKWARDS The forward look will be between one and two The years: the future of many troubled companies could be the determined within this period determined Seek borrower’s commitment to repay on new terms/conditions possible reschedulement/repricing/ possib...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online