Assignment: CREDIT AND LENDING DECISIONS
Part A: Global Machinery and Metals Company SPECIFIC REQUIREMENTS / QUESTIONS:
1. Outline the mechanics of a letter of credit arrangement. Examine the bank's exposure to risk should it accept time drafts. In GMMC's case what additional collateral should Motor City National Bank then obtain?
2. Examine GMMC's financial statements and then conduct a financial ratio analysis. Does the firm have adequate collateral in receivables and inventory?
3. GMMC is requesting increases in its lines of credit to meet its sales growth. Should Motor City National Bank approve it increases in both the line of credit and the letter of credit? What special risks do you see in this situation:
• To the bank?
• To the company?
Part B: Caudillo, Houben and Noor (2015) "Growing beyond the core business" McKinsey & Company
Quality is the most appropriate determinant of the grade awarded but it is suggested that approximately 1,500 words be a suitable length.
The group paper should have an abstract.
GMMC is seeking an increase in credit line to meet its sales growth. How do the views and analyses presented by Caudillo et al (2015) be incorporated by GMMC's management to improve their profitability and reduce their risk?
Case 1: GLOBAL MACHINERY AND METALS COMPANY, INC.
Case 2: McKinsey & Company- Growing beyond the core business