You are a commercial lending manager with the Great Canadian Bank, and you are reviewing some financial

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Question:

You are a commercial lending manager with the Great Canadian Bank, and you are reviewing some financial information that has been sent to you by one of your business clients, the Open-Road Construction Associates (ORCA). This company specializes in the design, planning, and building of roads, bridges, overpasses and related road-based infrastructure.

ORCA was recently awarded an $ 80 million contract by the City of Calgary to build a number of roadways that will connect four Calgary communities to the new south-west ring-road extension project. That project will start on June 5, and the financial manager of ORCA has sent you the following information. That information is in advance of a meeting between you and the financial manager of ORCA, later today, who plans to ask what types of lines of credit that your bank may be able to offer to ORCA to help them to finance some of their expenses that are connected to the new contract.

Total revenue / total sales $ 20,000,000 Net profit $ 3,500,000

Accounts receivable $ 6,000,000 Accounts payable $ 2,800,000

Labour costs $ 3,400,000 Fuel expense $ 250,000

Inventory (sand, stone, steel) $ 4,000,000 Liability insurance $ 180,000

Fire and theft insurance $ 70,000 New machinery purchases $ 3,000,000

You have reviewed this information, as well as the latest balance sheet and cash-flow statement on ORCA, and have determined that they can easily pass the Five - C credit test. As a result, ORCA would qualify for three separate types of lines of credit.

Name those three (3) types of lines of credit (what each of them can finance) and provide your estimate of the approximate range (dollar amount) of each of those lines of credit,