As a credit analyst for Ledig Commercial Bank, you assess client applications for term loans and other
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Question:
As a credit analyst for Ledig Commercial Bank, you assess client applications for term loans and other facilities. Mogwase Steenwerke Beperk, a brick manufacturing enterprise, requires an overdraft facility and provides you with the following details:
• Current assets of R15m
• Current liabilities of R8m
• Net sales of R25m
• Debtors’ collection period of 30 days
• Quick ratio of 0.97x
• Mogwase Steenwerke Beperk does not have any pre-paid expenses.
I. Calculate the following:
a. current ratio
b. level of inventory
c. receivables
II. What is your recommendation to the credit manager?
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