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Assume You Are a Credit Manager in Charge of Approving

question 37

Essay

Assume you are a credit manager in charge of approving commercial loans to business firms.Identify three aspects of a firm's cash flows you would review and explain the type of information you hope to gain from reviewing each of those five aspects.


Definitions:

Actual Results

The real, measured outcomes of financial or operational activities, used to compare against budgeted or forecasted figures for analysis.

Administrative Expenses

Costs associated with the general administration of a business, such as salaries of executive officers, legal and secretarial expenses.

Client-visits

The instances when a client or customer visits a business premise for the purpose of obtaining services or conducting business.

Activity Variance

The difference between budgeted and actual costs due to changes in the level of activity.

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