Risks-in- Working- Capital-and- Equipment- Loans营运资本和课件.pptVIP

* By the time a borrower is forced to delay paying any debt, numerous payments, such as for trade debt, may already have been delayed. First we need to see how the firm is servicing its current liabilities. Lets assume the sales volume doubles. This, in turn causes current assets to double, since there are now twice as many items in the processing stream. With working capital remaining unchanged, current liabilities are forces to grow disproportionately, resulting in past-due debts. This is a problem that can result from rapidly growing sales. If working capital or the commitments from current creditors can keep pace with the increasing level of current assets, greater sales can be beneficial. But if this is not the case, it is actually possible fro a firm to “grow itself to death”. Leaving the sales volume alone, let’s assume that the rate of turnover of current assets slows to half its former rate. This would cause, likewise, current assets to double. The same number of items would eneter the processing stream as before but take twice as long to work their way through, resulting in twice as many items in the stream. sWith no change in working capital, current liabilities would more than double, exceeding the sum committed by the current creditors. Of the options for preventing or resolving a problem in servicing current debts, the one that involves the banker is a short-term loan. To consider a request for such a loan, a loan officer needs to determine which of the factors previously discussed (alone or in combination) led to the need to borrow and the prospect for a reversal or offsetting occurrence by the time the loan would come due. * Deplition of margin. Sales minded managers will pursue sales volume at expense of margin profit. Sales of $100,000 at 10% yields $10,000 in profits, but sales at 9% margin require an increase of sales of 11% to make the same profit. 8% requires 25% more sales, 7% requires 43%, 6% requires 67%, and 5% margin requires