1 page each total of 2 pagesTopic 1: Discuss the credit process with companies looking to borrow...

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1 page each total of 2 pagesTopic 1: Discuss the credit process with companies looking to borrow money. What credit application criteria do you think banks give the most consideration? How hard is it for a new company to get a loan?Topic 2: Why do financial managers tend to evaluate investment opportunities with present value techniques? Which techniques do you think are most valuable to financial managers and why?

David · Accepted Answer

Part 1 
Credit Process: 
The companies which looks forward to borrow money needs to have good credit history and 
strong financial leverage. The company who needs to borrow money, first needs to analyze the 
amount of money that needs to be borrowed along with the lender or the bank from which the 
company is likely to get the loan or borrow money. After analyzing the requirement and the 
lender, the company needs to submit the application for approval of the loan. Along with the 
application the company will need to submit their past financial reports and credit history. The 
lender usually analyzes the financials of the company with a strong focus on different aspects 
particularly on the company’s assets, liabilities and owner’s equity. The lender also looks at the 
gearing and solvency ratio of the company so as to analyze its leverage and financial strength 
to pay off the loan.  
Gearing Ratio is a general terminology used for explaining a financial ratio that makes 
comparison between the owner’s capital and borrowed funds. The appropriate or acceptable 
level for any gearing ratio is determined by making comparison with the ratios of companies in 
the same industry. Ratio show the percentage of debt a company is maintaining in its capital 
structure. This provides the company with an idea about the leverage of the company along 
with the potential risks faced by the company in relation to debt-load. Debt Ratio greater than 
100% indicates that the company is having more debt in comparison to assets while a debt ratio 
of lower than 100% shows that company is having more assets than debt.

1 page each total of 2 pages Topic 1: Discuss the credit process with companies looking to borrow money. What credit application criteria do you think banks give the most consideration? How hard is it...

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