Running Head GLOBAL MACHINERY AND METALS COMPANY CASE1GLO.docx

Running Head: GLOBAL MACHINERY AND METALS
COMPANY CASE
1
GLOBAL MACHINERY AND METALS COMPANY CASE
11
Part A: Global Machinery and Metals Company Case
Name:
Institution:
Part A: Global Machinery and Metals Company Case
Executive Summary
Based on information the case, this paper will outline the
different mechanics of a letter of credit arrangement and
determine the bank’s exposure to risk if it approved the time
drafts. It will then apply the case to determine specific
additional collateral that motor city bank will obtain. The
financial statements of GMMC will also be examined and then a
financial ratio analysis will then be conducted. This will
determine whether the firm contains adequate collateral in
inventory and receivables. The company, GMMC also requested
an increase in its credit lines to manage its sales growth. A
decision should be made whether the motor city national banks
should increase its letter of credit lines with the line of credit
and the special risks that might occur in this situation both to
the bank and the company.
Question 1

Mechanics of a Letter Of Credit Arrangement
Letter of credit arrangements are the most secure mechanisms
that are used internationally by traders. A letter of credit refers
to the commitments made by a banking institution on behalf of
the buyer or customer that payment shall be made to the
exporter or dealer provided that the terms and conditions stated
in the letter of credit are met as substantiated by the
presentation of all the needed documents (Tracy, 2012). The
customers or buyers pay their banks to render this service on
their behalf. A letter of credit is significant when there is
reliable credit information about an international buyer is hard
to obtain and the exporter is satisfied with the buyer’s foreign
bank creditworthiness. The buyer is protected by the letter of
credit as there is no payment obligation is required until the
goods have been distributed and delivered to the buyer as
promised.
In the trade contract process, the buyer sends the letter of credit
to his bank and requests for funding to pay for all the liabilities
to the exporter in accordance to the sales contract. The opening
bank the issues a letter of credit that responds to the requests of
the exporter and shows the viability of the request, finally, an
advising bank notifies the exporter about the state of funding
that it the opening bank can offer (Stark, 2016). Finally, in the
cargo shipment process, the exporter prepares the goods for
shipment after receiving the letter of credit confirmation and
organizes all the formalities regarding the export process.
Source: Payson, (2013)
The next process is the loading of the goods to the ship while
the shipping company submits a receipt of the goods received,
forwarding contract and a copy of the ownership of the goods.
The shipping company delivers the goods to the importer and
the shipping agent surrenders the goods to the importer
(Abramov, et al. 2015). All these processes are critical and

should be taken seriously by anyone seeking to sell goods
internationally.
Usually a letter of credit is subject to the uniform practice and
customs for documentary credits on the global chamber of
commerce publication number 600.
The availability of the letter of credit
Under the uniform practices the letter of credit is made
available under several conditions which include:
· Payment at sight and against acquiescent documents
· Negotiation that involves payment with or without remedy or
alternative to the bona fide holder against documents which are
compliant and presented under this credit.
· Drawee Bank acceptance. The bank implements payment at a
future date that is determined against compliant documents.
Under an acceptance credit that is drawn on the acceptance bank
instead of the issuing bank, a tenor draft is usually needed
under acceptance credit.
Risks Faced By the Bank in Issuing the Letter Of Credit
Risks refer to the various uncertainties involved with regard to
the investments made by a firm that has the probability of
having a negative impact on the financial welfare of the
business. A risk refers to the likelihood or probability of
gaining or losing something valuable. Valuables such as social
status, physical health, and emotional wellbeing van are lost or
gained when taking risks and this can result from a specific
action or inaction that may be unforeseen or foreseen. Risks can
also be described as the deliberate interactions with uncertainty
which is the potential to have an uncontrollable and
unpredictable outcome. A risk, therefore, results from the
consequences of actions taken regardless of uncertainty. Risk
perception defines the subjective judgment that people make

concerning the probability and severity of a risk which can vary
across various individuals. Any human endeavor has some risk
even though some are riskier compared to others. Too much
elaboration here.
Firms particularly those engaging in trade have been exposed to
risks that result from unexpected movements in the current
exchange rate that is characterized by volatile financial market.
When a bank is viewed to be in a weak position financially,
depositors of the bank often withdraw their funds and other
banks cannot lend it money (Davidson, 2011). The bank will
also be unable to sell its debt securities such as commercial
papers and even bonds. In the financial market and this
aggravates the financial condition of the bank. Therefore, the
fear of bank failure was viewed to be one of the main causes of
the credit crisis of 2007 to 2009 and the cause of past financial
panics. For example, in the year 2008, the Scotland Royal Bank
that was the largest global bank with estimated assets worth
£2.4 trillion was failed by just £8 billion pounds loss that was
0.3 percent of its assets(Kabir, 2010). This is because the bank
was leveraged to the hilt. This section describes bank failure
and bank runs due to having lost the trust of depositors, but the
question asks for the risk the bank faces when issuing an LC to
GMCC. (what could go wrong with GMCC that affects the
issuing bank?)
Therefore managing these risks has become a vital aspect for
the survival of these firms.
Banks have several risks that have to be carefully managed
particularly because they use a significant amount of leverage.
Without effectively managing risks, it can be very easy for a
bank to be insolvent. Therefore, every investment that is made
has a significant amount of risks and it is important to
understand and accept some of the risks that the business might
be exposed to. However, the firm can have a risk management
plan to mitigate some of the risks that may affect the
performance of the business. Elaborating the consequences of

mismanaging risks, answers little to the question While banks
share several similar risks as other organizations, major risks
that specifically affect banks include, interest risks, liquidity
risks trading risks and credit default risks.
Liquidity risks
This refers o the risk of being unable to sell the company’s
investment at a fair rate and return the investment capital in a
given period. Therefore, in order to sell the investment, the
company will have to accept a reduced price or it may not be
possible to sell the investment. Liquidity risks may arise due to
mismanagement of cash flows and delays in project
implementation.
Political risks
These are risks that are connected to the nationalization of some
sectors of the economy, poor government policies, and actions,
as well as social changes that may result in the loss of value of
the company’s investment (Lackner& McEwen-Fial, 2011).
Interest rate risks
This is the likelihood that a fixed rate debt instrument will
reduce in its value due to the increase in interest rates. it is the
risk of losing capital due to the change in the interest rates. For
instance, if the rate of interest increases the market value of
bonds decreases (Beckmann et al. 2015).
Foreign exchange risks
This is the risk associated with investing in foreign countries
(Brown, 2014). For instance, when purchasing foreign
investments in various emerging, markets there are various risks
involved such as currency restrictions, repatriation of
repayments and principal amounts .

Market risks
This includes the risks associated with various investments
declining in value due to economic developments or other
events that can affect the whole market. Market risks include
equity risk, currency risks, as well as the interest rate risks.
Commodity risks
Commodity risks include uncertainties that are related to the
future market values including the size of the future revenue
that can be caused by price fluctuation of products such as gas,
electricity, oil and metals.
Borrower or credit risks
This is the risk that the company or government enterprise that
may be offered a bond will run into financial difficulties and
may not be able to pay the required interest or the principal
when it matures. These risks apply to credit investments such as
bonds.
Overall very good explanation of various types of risks, but
better to include GMCC in the picture. For example: If an LC is
issued, GMCC would first receive the materials, then the bank
would pay the exporter. But If GMCC does not have enough
money to pay the bank after receiving the materials, the bank
would be in trouble as it would still have to pay the exporter.
Additional Collateral That Should Be Obtained By Motor Bank
These are additional assets that are set up as security by the
borrower against its debt obligations. Extra collateral is used to
minimize risks to the lender. Creditors often require additional
collateral for a particular loan to be at the constant level of
interest or even to please the credit committee and the investors.
Collateral includes certificates of deposit, cash, equipment,

letters of credit and stock. They are mainly employed when
securing loans as a method of increasing the probability of
repayment. Therefore, when the borrower defaults, the lender
will have the right to get collateral in an effort to pay off the
rest of the loan. When additional funds are sought, extra
collateral may be required like in this case. What is valuable in
GMCC for the bank? E.g Materials, Property, Plant, and
Equipment can all be used as collateral. Relate more to GMCC.
Question 2
Four classes of ratios and numbers [Leverage, Liquidity,
Activity(efficiency), Profitability ratios]
The shareholders of a firm are affected by the profitability of
the firm which in turn affects the earnings per share. Ratio
analysis is used to evaluate the ability of the firm to adequately
make income from the total revenue while at the same time
controlling the costs through efficient asset utilization and use
equity as well as investments (Abid, 2016). Ratios have the
ability to demonstrate an accurate evaluation of the corporation
when it is held against its competitors in the industry as the
total income as well as the net income that is most often
associated with the individual operations of the company. The
balance sheet demonstrates that retained earnings for the
company show a decreasing trend, which is not suitable for the
enterprise (Prestridge, 2013). The long-term and short-term
borrowings for the group increased between 1985 and 1987,
which is not appropriate for the firm (Davidson, 2011). The
percentage change in various investments made by the company
is not satisfactory enough.
Profitability ratio
Profitability ratios are used to evaluate a firm’s capacity to
generate earnings or revenue compared to the expenses as well
as costs during a particular period.
Net profit margin in percentage

This ratio is used as to work out the net profit as a percentage
of the net sales.
Is calculated as profit after tax/net sales X 100
Years
1985
1986
1987
2.37
2.57
0.53
In 1985, the ratio was excellent, but it increased in 1987, but it
greatly declined from in 1987. This is alarming for the
organization and GMMC had to take an appropriate action.
Year over Year sales growth
Year over year sales growth is used to measure demographic
changes against the same statistics in the same period the
previous year(Payson, 2013). It is a percentage calculation that
evaluates the increase or decrease of the quantity measured over
the past year.
Gross profit margin in percentage
The gross profit margin ratio is used to explain the gross profit
as a percentage of the net sales. It is calculated as
Gross profit/ net sales X 100
Years
1985
1986

1987
23.97
23.04
24.29
In 1985 the ratio was 23.97 that declined slightly in 1986 to
23.04 and improved to 24.29 in 1987. This rate reduction is not
favorable for the GMMC because it shows an increase in the
interest expenses.
DU Point analysis
This analysis is used to find out the return on equity, as well as
analyzing the profit margin, financial leverage of the company
and the total asset turnover (Nanavati, 2012). The analysis
refers to a financial ratio that can be used in evaluating a firm’s
capacity to increase its return on equity. The model breaks
down restitution on capital ratio and intends to explain how the
company can improve its returns for the shareholders.
Return on equity
Return on equity is calculated as
Return on equity= profit margin x total asset turnover x
financial leverage
Where by the profit margin = net income/net sales, total asset
turn over= net sales/ average total assets and financial leverage
= total assets/ total equity.
This model evaluates the return on equity of the firm and the
various impacts of performance measures of this organization
(Ezzamel & Heathfield, 2013). GMMC had a low return on
equity ratio, and this was not satisfactory result to the investors.

Therefore, the problem was the low-profit margin realized
which led to the poor financial advantage of the company.
Efficiency ratios (Activity ratio = efficiency ratio?)
These ratios are used to evaluate how efficiently a firm utilizes
its assets as well as liabilities in its internal operations. They
are used to calculate the turnover of their receivables,
repayment of the liabilities the equity and quantity usage and
comprehensive inventory and machinery use.
Days of Debtors Outstanding
Days payable outstanding refers to the average payable period
of the company. It explains the amount of time that it takes a
company to pay its invoices from various trade creditors, for
example, the suppliers (Tracy, 2012).
Fixed Assets Turnover
The fixed asset turnover ratio is used to measure a company’s
operating performance. It compares the net sales to the capital
(Sheela & Karthikeyan, 2012).The fixed asset turnover ratio
particularly measures the ability of a company to generate sales
from fixed asset investments such as plant and equipment,
property, and the explicit depreciation. Higher turnover ratio as
indicated by GMMC means a more efficient investment in fixed
assets and their ability to generate revenue.
Liquidity ratios
Current ratio
The current ratio is used to compare the relationship between
current assets and current liabilities and demonstrate the ability
of the company to pay back its current liabilities through using
its existing assets. It is calculated as

Current ratio=current assets/current liabilities
Quick ratio
The quick ratio is used to indicate a firm’s short-term liquidity.
It measures the ability of the firm to meet its short-term
obligations using its liquid assets.
Quick ratio =
(current assets – inventories) / current liabilities
Activity or solvency ratios (Activity ratio = efficiency ratio?)
These ratios are developed to measure the level of financial risk
that a business faces through considering various measures such
as debt to equity, debt to asset, Gearing ratios and interest cover
ratios.
Average settlement period for trade receivables
The average settlement period for trade receivables refers to the
average amount of days between the day credit sales was made
and the date of receiving the cash from the client. The average
period of collection is also known as the period sales in
accounts receivables. The average collection period was 14.45
in 1986 and 16.84 days. The average industrial period was 10
days. The average industrial accounts receivable turnover ratio
was 10 days per year and thus the mean collection period was
36.5 days. An additional manner of calculating the average
period of collection includes:
Average receivable accounts balance that is divided by the
average daily credit sales.
Evaluating the average collection period is essential for the cash
flow of a firm as well as its ability to meet its requirements
when they are due.

Average inventories turnover period
Inventories form an important part of the business operations of
GMMC. This is because it can account for a significant section
of the assets held (Zink, et al. 2014). The ratio weighs the
average period for holding the inventories. This can be done in
daily, monthly and weekly basis.
AITP = (Average inventories held / Cost of sales) x 365
The average inventories can be computed as the opening and
closing inventories. For highly seasonal enterprises often prefer
weekly and monthly basis instead of annually. GMMC usually
prefered short inventory turnover ratio.
The average inventories turnover period was 43.17 in 1985,
49.56 in 1986 and the average industrial inventory turnover
period for the industry was 30 days.
Interest cover ratio
The interest cover ratio is a profitability and debt ratio that
determines how easily a firm can pay outstanding debt interest.
This ratio is calculated by dividing the earnings of a company
before interest and taxes during a specific period by the amount
paid by a firm in interest on debts during a similar period.
Interest coverage ratio= EBIT/ Interest expense
The interest coverage ratio measures the capability of a firm to
handle its outstanding debt. It is a debt ratio which can be used
to measure the financial conditions of a firm. GMMC had an
interest coverage ratio of 14.80 in the 1985 financial year, 13.35
in 1987 and an industrial average of 10. An excellent interest
coverage ratio is vital as a firm cannot grow unless it is capable
of surviving, unless it effectively pays its interest on the current

creditor obligations.
Can the activity ratios provide GMCC with funds from
inventory and AR?
Are GMCC’s Inventory and AR of sound quality?
Any comments on bad debt, sales increase, etc? I.e Do any of
these numbers pose a threat to GMCC?
Question 3A
The line of credit refers to an arrangement between the bank or
any other financial institution as well as a customer through
establishing a maximum loan balance in which the bank allows
the GMMC company to access and maintain. the borrower in
this case can have access to the line of credit any period as long
as they do not exceed the agreed maximum amount set and
meets other requirements agreed set by the other financial
institution such as maximum and timely payment.
Request line of credit: $500,000 to $1M and letter of credit:
$250,000 to $1M
The assistant vice president of motor city national bank, Mr.
David Farmer, in the early 1988 was considering providing an
extended loan request from one of the most established clients
of the company that was the Global Machinery and Metals
Company, Inc. David had recently joined the motor city bank
after being hired from a nearby competing institution because
he had an experience of two years on credit analysis and
lending. The account for the customer, GMMC had been in
existence for four years and it was influenced and opened by an
officer that had replaced David and thus he did not have initial
experience or contact with the managers of the corporation. The
only understanding he has was that the account had been
profitable and satisfactory for the bank since the customer
started its relationship with the bank four years ago. one of the
principles of GMMC corporation, Wayne Newton, approached
David Farmer with a formal request for material increase in the
credit facilities of the firm. Newton requested for an advanced

line of credit to an amount of $1 million as well as an increase
in the letter of credit to $1million. The presently approved
credit for GMMC Corporation included a letter of credit worth
$750,000 at prime with an additional 2 percent and a fee of
1percent annually at issue with an additional 1 percent funding.
Also, the line of credit was $500,000 Tat prime with an
additional 2 percent. The preceding recognized credit lines that
had been improved in 1985 were safeguarded by the entire
inventory and accounts receivable as well as 40 percent of the
inventory in amounts that were not exceeding the approved total
credit limit.
In the accounting sense, the firm can be said to have had
positive earnings as the cash flow from operations was positive.
Therefore, the company had to raise some money from its
shareholders to support new investments. The statement of cash
flow is essential in examining the short-term viability of a
corporation especially its ability to pay its creditors and costs
such as bills. It enables the shareholders of a company to assess
how the agency’s operations are running, the source of
revenues, and how the capital is being spent. It is important to
accountants as they can know the liquidity position of the
company. Potential creditors can also know the capability of the
company to pay its debts. Employees also can learn through the
financial statements of the company’s ability to pay.
Question 3B
Line of credit mainly to machine division
the bank should accept increasing both the line of credit as well
as the letter of credit investment in this company because its
financial performance is good and the prospective of getting a
significant return on investment is high (Fritsche & Dugan,
2011). The overall performance of the organization is good as
demonstrated by the various financial and non-financial
performance measures. However, the team needs to develop
more efficient and aggressive strategies to ensure that it

achieves better performance that can steer it ahead of its
competitors. Preferably use ratios to back up claims. Needs
more elaboration on the business of the Machine Tools Division
(Sales lowered as compared to Metals Division, but profit
margin still high)
Credit fully used? Yes, fully used up LC in 12/31/87
Letter of credit for additional steel inventory
All the departments of the inventory management that is the
manufacturing, purchasing, marketing, and finance management
are essential as they determine healthy resource chain in supply
and also cause an inevitable impact on the financial strength as
per the balance sheet. In every existing business, all these
inventory functions are interconnected to each other and overlap
at a certain instance. For example, the base of the business
delivery function is made up of various aspects such as the
supply chain management, inventory and the logistics.
Inventory is crucial to every business, hence its management
requires lots of keen and care especially during its evaluation
on the basis of both internal and the external factors. These
factors have to be controlled by either reviewing or planning
which is done by the Department of inventory planners.
Department of Inventory = Metals division The finance,
purchasing, and the manufacturing departments are mostly
involved by the inventory planners when monitoring, reviewing
and controlling the inventory.
Bankers and other financial institutions use the current ratios as
well as the profitability ratios to assess the credit worthiness of
the firm. This is because the Current ratio evaluates the firm’s
ability to pay its current liabilities through its current assets.
The profitability statistics for GMMC are at a higher ratio when
compared to the industrial average. Where are the industrial
averages? While the prices of products can threaten or risk the
cost-effectiveness of the firm and its peers in the industry, the
Corporation has maintained a remarkable interest coverage ratio
in the present years. Will interest coverage ratios determine if

GMCC needs a letter of credit for additional steel inventory? If
not, what are the determinants? The main risks in my view
which the company can risk are solvency risks. The firm should
check and adequately manage its liquidity status because of the
increase in fixed asset investments. Also, the bank can face
interest rate risks. Slightly redundant, why talk about the bank’s
interest rate risk in this section? Does GMMC really need a
letter of credit for additional steel inventory? Why?
What about Foreign Exchange risks faced by GMMC? (As
GMMC imports materials from foreign countries) Any hedging
required? (required for sure)
References
Abid, A. M. (2016). Financial statement analysis: 3 years
vertical, horizontal and ratio analysis of Bank Al-Falah (2006-
08).
Abramov, A., Radygin, A., & Chernova, M. (2015). Long-term
portfolio investments: New insight into return and risk. Russian
Journal of Economics, 1(3), 273–293.
Davidson, M. (2011). 28 manufacturing metrics that matter (the
ones we rely on).
Ezzamel, M., & Heathfield, D. (2013). Perspectives on financial
control: Essays in memory of Kenneth Hilton.
Fritsche, S. R., & Dugan, M. T. (2011). Evaluating models of
the relationship between accounting profitability measures and
internal rate of return.
Kabir, M. H. (2010). Positive Accounting Theory and Science.
Nanavati, N. K. (2012). Dupont analysis to measure return on
equity of Satyam computer services limited (now known as
Mahindra Satyam Limited). PARIPEX, 2(3), 38–40.

Payson, H. (2013, September 24). The hierarchy of risks.
Prestridge, J. (2013, December 3). Venture capital trusts: What
are they and should you invest in them? DIY investing.
Sheela, C. S., & Karthikeyan, K. (2012). Financial performance
of the pharmaceutical industry in India using DuPont analysis. ,
4(14),
Sinclair, M. (2015, March 20). Finance division.
Stark, A. (2016). Estimating economic performance from
accounting data—a review and synthesis.
Tracy, A. (2012). Ratio analysis fundamentals: How 17
financial ratios can allow you to Analyse any business on the
planet.
Morgan State University Chavis · Fall 2017
Lab 1 - Design of Alignments
Due Thursday, October 6
Problem Statement
Morgan State University has hired you to prepare a report
regarding the safety along Hillen Ave./Perring
Pkwy due to the geometric alignment. It has come to the
University’s attention that a high number
of accidents have occurred along the corridor. For a map of
crashes see https://c-chavis.carto.
com/viz/7aa334f0-5d7c-11e6-a973-0e05a8b3e3d7/public_map
Specifically the University has two areas of concern (see Figure

1 ):
1
2
Figure 1: Study site locations
1. The horizontal curve just north of E. Cold Spring Lane.
2. The vertical curve between E. Cold Spring Lane and Argonne
Rd.
TRSS 415: Lab #1 1 of 3
https://c-chavis.carto.com/viz/7aa334f0-5d7c-11e6-a973-
0e05a8b3e3d7/public_map
https://c-chavis.carto.com/viz/7aa334f0-5d7c-11e6-a973-
0e05a8b3e3d7/public_map
Report Guidelines
Your report needs to include the following:
• A clear introduction
• The vertical and horizontal (1) alignments drawn to scale at
whole station intervals. If drawing
by hand, please use graphing paper. For the vertical alignment a
table of the elevations at each
station must be provided. For horizontal alignment a table with
the deflection (feet) angle
(degrees) and chord lengths (feet) must be provided. Also, it

must be clearly shown how the
deflection angle and chord length was used to construct the
horizontal alignment. Be sure to
include the scale on your diagrams.
• An analysis determining if the each of the problem areas is
safe from a geometric design point
of view. You need to determine if the length of the curve is
sufficient and if there are any
horizontal sight obstructions. Test if the curve is safe at the
speed limit of 35 mph
and at 40 mph.
•
Solution
s addressing any problems you find during the analysis.
In the report please refer in units of feet and stations. Report all
calculations and provide the values
used for the horizontal and vertical alignments at every whole
station between the beginning and
end of the curve.
Be sure to write assumptions, results and conclusions. Each
group is also expected to complete a
report presented in a professional format that is consistent with
one specific style manual (Chicago,

APA, etc.). Be sure to make consistent use of font type, font
size, margins, justification, line spacing,
page number, headings, etc. as you complete your work. Display
your findings in a sequential and
logical manner, and when needed, through the use of
appropriate tables, graphs, or other methods
of presenting quantitative or qualitative data.
You may work in groups of two.
TRSS 415: Lab #1 2 of 3
Tips
Vertical Alignment
In order to determine the alignment of the crest curves the
beginning and ending grades must be
determined as well as the length of the curve. This will require
the use of software to determine
the elevation. Two options are to use Google Earth Software or

the MapMyRun route creation tool
(http://www.mapmyrun.com/routes/create/). I suggest the latter
as its easier to map the route.
You need to calculate and clearly label the grades (G1, G2) of
each tangent, station and elevation of
the PVC, PVI, and PVT, the length of the curve (L). Determine
the station and elevation of the
highest point. You may assume that the PVC occurs at Station 0
for simplicity if you like.
Horizontal Alignment
Assume the given curve is a simple curve. In order to lay out
the horizontal alignment you need to
first determine the intersection angle, ∆, and then the length of
the curve. A print out of the map
at that location, a ruler and protractor will aid you in
determining those values.
Other
Using standards and equations presented in lecture, calculate
SSD, minimum curve length, and
other parameters to evaluate the existing plan. If you found

evidence that the standards are not
met, provide practical solutions to improve safety.
TRSS 415: Lab #1 3 of 3
http://www.mapmyrun.com/routes/create/
Vertical Curve – Site 2
CLD Case Review GMMC [Part A]
Question 1
· Mechanics of letter of credit arrangement
· Risks faced by the bank in issuing a letter of credit.
[Provide 4 classes of risk: insolvency of GMMC, etc, etc]
· Additional collateral [what does GMMC have that is of value
to the bank?]
Comment in GMMC has high or low default risk.
Question 2
· Provide 4 classes of ratios and numbers [Leverage, Liquidity,

Activity(efficiency), Profitability ratios]
· Look into activity ratio and see if it can provide GMMC with
funds from inventory and account receivables. [Decrease
collection period and increase inventory turnover]
· Inventory and accounts receivable of sound quality?
· Comment on bad debt, sales increase, etc.
Question 3A
· Request line of credit: $500,000 to $1M
· Request letter of credit: $250,000 to $1M
Question 3B
· Line of credit mainly to machine tool division (business of
division? Credit fully used?)
· Letter of credit for additional steel inventory. Why?
· FX risks. Hedging required?
Other issues – Ratio analysis, peer analysis, sensitivity analysis.

Running Head GLOBAL MACHINERY AND METALS COMPANY CASE1GLO.docx

Recommended

Recommended

More Related Content

Similar to Running Head GLOBAL MACHINERY AND METALS COMPANY CASE1GLO.docx

Similar to Running Head GLOBAL MACHINERY AND METALS COMPANY CASE1GLO.docx (20)

More from cowinhelen

More from cowinhelen (20)

Recently uploaded

Recently uploaded (20)

Running Head GLOBAL MACHINERY AND METALS COMPANY CASE1GLO.docx