Fariha Bank is a reputable bank in the financial market of Bangladesh. They are currently in a position to give loans to

[answerhappygod]

Fariha Bank is a reputable bank in the financial market of
Bangladesh. They are currently in a position to give loans to
corporations. The financial market of Bangladesh is booming and
market intelligence is that interest rate might rise. In the market
they are known for not taking unnecessary risks and public
confidence in the bank is high. Operating with a negative interest
sensitive gap and cumulative gap, the management of the bank
believes in not applying aggressive strategies when market is in
turmoil. Due to the booming market the management of the bank has
decided to venture into various investments by providing loans to
various industries. One such loan officer from the bank has been
sitting with loan applications from two companies, all of which are
from different sectors. He is confused and cannot decide which loan
he should approve or should he approve all two or none at all.
Below table lists some of the key financial ratios of the
companies:
Ratios
Renata Pharmaceuticals
Beximco
Pharmaceuticals
Currents Ratio
4.5
3.8
Quick Ratio
2.0
2.5
Average Collection Period
65 days
73 days
Return on Assets
6.79%
6.17%
Debt- Asset ratio
.40
.52
Debt Equity ratio
2.5
1.5
Using the above financial ratios and 6 C’s of Creditworthiness
Checking assist the loan officer of Fariha bank to determine
which company or companies are best suited to receive loan; or do
you think the loan officer should decline all two. Explain in
details the methods used to validate your answer. Make sure your
answer has clear logic and reasoning. Make sure you give a clear
decision.