Analysis of Financial Statements
In 2005, the company paid its suppliers much later than the due dates, and it was not maintaining financial ratios at levels called for in bank loan agreements. Therefore, suppliers could cut the company off, and its bank could refuse to renew the loan when it comes due in 90 days. On the basis of data provided, would you, as a credit manager, continue to sell to D'Leon on credit? (You should demand cash on delivery-that is, sell on terms of COD -but that might cause D'Leon to stop buying from your company.)Similarly, if you were the bank loan officer, would you recommend renewing the loan or demand its repayment? Would your actions be influenced if in early, 2006, D'Leon show you it's projections plus proof that it was going to raise more than $1.2 million of equity?
In hindsight, what should D'Leon have done back in 2004?© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/accounting/analysis-of-financial-statements-7eul
...on we will be more likely to increase our losses due to D'Leon's delay in payment.
As a bank loan officer, I would not recommend renewing the loan, but to demand its repayment. One way to do this is that I can re-amortize D'Leon's loan since it seems they are having problem with monthly payment. This is so that the remaining balance is amortized at the same interest rate for an extended period of time (Gamble, 2009). Consequently, D'Leon's monthly payment will be reduced. ...