[Bank Loan Considerations] Assume you started a new business last year with $50,000 of your own money that was used to p

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[Bank Loan Considerations] Assume you started a new
business last year with $50,000 of your own money that was used to
purchase equipment. Now you are seeking a $25,000 loan to
finance the inventory needed to reach this year’s sales
target. You have agreed to pledge your venture’s delivery
truck and your personal automobile as support for the loan.
Your sister also has agreed to cosign the loan. During your
initial year of operation, you paid your suppliers in a timely
fashion.
A. Analyze the loan request from the viewpoint of a
lender who uses the “five Cs” of credit analysis as an aid in
deciding whether to make loans.
B. Assume you are currently carrying an accounts
receivable balance of $10,000. How might you use accounts
receivables to obtain an additional bank loan?
C. Assume at the end of next year, you
will have an accounts receivable balance of $15,000 and an
inventories balance of $30,000. If a
bank normally lends an amount equal to 80 percent of accounts
receivable and 50 percent of inventories pledged as collateral,
what would be the amount of a bank loan a year from now?