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Avoid the Hustle

Forest of Flowers

Forest of Flowers

For this case study you will take on the role of Brad McDougall. You should complete a

thorough review of the loan request. As a relatively new credit analyst, you will not get to make

the final determination on the loan. Instead you will present your results and recommendation

to the credit committee of the Business Development Bank of Canada.

For this assignment you should write a memo to the members of the Business Development

Bank of Canada’s Credit Committee. The members of the Committee will be extremely well

versed in finance. Space dedicated to explaining simple finance concepts or the calculations

involved will prove to be jejune and poorly received by the members. The members are looking

for advanced analysis with evidence of critical thinking. The members always appreciate well

written memos that make appropriate use of correct grammar and spelling. They are also very

busy evaluating several loan proposals therefore memos written in a concise manner are better

received.

1. You must evaluate each of the 5 C’s of Credit explicitly in your memo. A competent

analysis is certain to have some discussion of the company’s past performance in terms

of the financial ratios we have discussed (liquidity, solvency, profitability, efficiency,

etc.). Furthermore, a strong analysis would assess projected project cash flow under

various scenarios (expected, best case, and worst case). You should write the conditions

section of your memo as if you were assessing the current industry conditions (that is,

use recent reports rather than pretending it is 2004).

Note: Although some ratios can be used to evaluate more than one C, you may not use

the same ratio to evaluate more than one C in your case study write-up. In addition, you

may not use two ratios that convey the same information (e.g., asset turnover and

capital intensity; or debt-equity ratio and equity multiplier).

2. If there are additional factors that you would need to make a final determination about

the project’s credit worthiness, then make explicit in your presentation those additional

pieces of information you would request.

3. You must state your loan recommendation (loan amount if any, interest rate and

repayment time). You must justify your decision using both your qualitative and

quantitative analysis.

4. If you recommend granting Forest of Flowers a loan, you must build an amortization

table that will serve as the loan repayment schedule.

Forest of Flowers

Forest of Flowers

For this case study you will take on the role of Brad McDougall. You should complete a

thorough review of the loan request. As a relatively new credit analyst, you will not get to make

the final determination on the loan. Instead you will present your results and recommendation

to the credit committee of the Business Development Bank of Canada.

For this assignment you should write a memo to the members of the Business Development

Bank of Canada’s Credit Committee. The members of the Committee will be extremely well

versed in finance. Space dedicated to explaining simple finance concepts or the calculations

involved will prove to be jejune and poorly received by the members. The members are looking

for advanced analysis with evidence of critical thinking. The members always appreciate well

written memos that make appropriate use of correct grammar and spelling. They are also very

busy evaluating several loan proposals therefore memos written in a concise manner are better

received.

1. You must evaluate each of the 5 C’s of Credit explicitly in your memo. A competent

analysis is certain to have some discussion of the company’s past performance in terms

of the financial ratios we have discussed (liquidity, solvency, profitability, efficiency,

etc.). Furthermore, a strong analysis would assess projected project cash flow under

various scenarios (expected, best case, and worst case). You should write the conditions

section of your memo as if you were assessing the current industry conditions (that is,

use recent reports rather than pretending it is 2004).

Note: Although some ratios can be used to evaluate more than one C, you may not use

the same ratio to evaluate more than one C in your case study write-up. In addition, you

may not use two ratios that convey the same information (e.g., asset turnover and

capital intensity; or debt-equity ratio and equity multiplier).

2. If there are additional factors that you would need to make a final determination about

the project’s credit worthiness, then make explicit in your presentation those additional

pieces of information you would request.

3. You must state your loan recommendation (loan amount if any, interest rate and

repayment time). You must justify your decision using both your qualitative and

quantitative analysis.

4. If you recommend granting Forest of Flowers a loan, you must build an amortization

table that will serve as the loan repayment schedule.