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A company is trying to obtain a loan at the bank for $1,000,000. What financial and...

A company is trying to obtain a loan at the bank for $1,000,000. What financial and nonfinancial information do you feel the bank would like to see regarding their potential client? The company is in the bio-tech industry and has a promising treatment for a rare cancer. Please advise in 200 words or more.

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Expert Solution

Bank will be looking for various kinds of financial as well as non financial information in order to issue a loan to this biotech company.

Financial aspect which will be looked after by the bank are as follows-

A. First of all, there will be a need for the financial detail of the business that will be including all the current and past loans and debt repayment history by the biotech company in order to evaluate credit worthiness.

B .There would be a demand for account receivables by the company because that will help the bank in elevating the cash payment ability of the company.

C .The bank will also be demanding for complete details of account payable as well as audited financial statements in order to evaluate the the creditor references and payment behaviour of the business.

D. Bank will also be asking the company for copies of the past returns and agreement of the future ratios which will be helpful in determination of loan covenant.

E. bank will also be looking for determination of all the insurance information of the company which will be help in reducing the risk of the business.

All the non financial aspect which would be looked after by the bank are as follows-

A. Bank will be looking for a strong management team which will be helping the business in proper allocation of the money and determination of the capital rationing.

B.it will also be looking after the growth prospect of the business and the ability of company to increase the market share and increase the product line.

C. it will also be looking for the biotech companies competitors and patent and copyrights in its books of accounts.

D. the bank will also be looking for better management of hiuman capital which are diversifying and well equipped in managing the risk.

E. Reputation of the business will also be examined by the bank because the business which has a reputed creditworthiness will always be preferred.

jeff jeffy answered 2 years ago
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