AIBB Management 2026 WRITTEN Question Bank, Complete Solution & PDF

Case-2 : Financial Ratio Analysis

Case scenario :

Pacilfic Garments Ltd., a ready-made garments exporter has applied to your bank for renewal and enhancement of its working capital facility from Tk. 6.00 crore to Tk. 9.00 crore. The client claims that they have secured a large export order from a new European buyer. You reviewed their audited financials for the last year, which showed the following information :

(i) Current Ratio: 1.08
(ii) Quick Ratio: 0.75
(iii) Debt Equity Ratio: 3.0
(iv) Net Profit Margin: 1.6%
(v) Inventory Turnover: 2.8 times
(vi) Accounts Receivable Collection Period: 90 days.

Tasks :

The client has regular repayment behavior, but has not submitted updated stock and receivables reports in the last two quarters. No overdue exists at present. As the credit officer, assess the financial health of the borrower using ratio analysis and provide recommendations on the renewal and enhancement request.

Questions :

(a) What do the above financial ratios indicate about the liquidity and solvency of the company?
(b) What are the risks involved in sanctioning an enhancement limit in the current financial condition?
(c) Suggest two credit risk control measures the bank can apply if he enhancement is approve.
(d) Based on your analysis, should the facility be renewed and enhanced? Justify.

Case-1 : Credit Risk Management and Working Capital Financing case scenario :

Century Apparels Ltd., a 100% export-oriented RMG factory located in Gazipur, has been operating for 12 years. The company has long-term relationship with EU buyers and usually enjoys steady cash flows. Recently, however global slowdown and raw material price spikes disrupted its operations.

The company approach your bank for a working capital limit enhancement from Tk. 7.00 crore to Tk. 10-00 crore. During assessment, you observed the following :

(i) Raw materials stock increased by 40% due to unexpected shipment delays.
(ii) Debtors aging shows receivables outstanding for more than 60 days (previously 30 days).
(iii) The company failed to maintain the required 25% cash margin for back to back LCs.
(iv) The account has experience two instances of excess drawing in the last six months.
(v) Despite stress, the company has recorded export order for the next six months.
(vi) The borrower request relaxation of covenants due to "temporary liquidity stress".

Tasks :

As the relationship manager, you must determine whether the enhancement is justified.

Questions :

(a) Identify the early warning signals present in the case.
(b) What additional information would you require before making a decision?
(c) How would you assess working capital requirement based on the data?
(d) Should the bank enhance the limit? Give justification.
(e) Suggest risk mitigant and monitoring measures.