AIBB Management WRITTEN Question Bank, Complete Solution & PDF

Briefly answer the following questions :

Compare and contrast between any five of the following :

Case 2 : Project Appraisal and Working Capital Financing

Case Scenario :

Green pack Ltd., a mid-sized packaging firm in Gazipur is planning to expand its productions capacity to meet growing market demand. The company has approached your bank for a term loan to finance new machinery and also for a working capital limit to support its growing operations. The management has submitted a detailed project proposal including capital expenditure, projected revenues, break-even analysis and working capital requirements. However, there are concerns regarding the accuracy of their financial projections, cost estimations and the company's ability to service the debt.

Key Information from Greenpack's Proposal :

Total Project Cost : BDT 2.5 crore

Proposed Loan : Term Loan-BDT 1.5 crore
                             Working capital -BDT 0.5 crore

Projected Internal Rate of Return (IRR) : 14%

Debt to Equity Ratio after Loan : 80 : 20

Sensitivity analysis shows profitability drops significantly with just 10% increase in input costs.

Tasks :

As a credit officer in charge of evaluating this proposal, prepare a comprehensive appraisal covering the financial and non-financial aspects of the project. Recommend whether to approve the loan and on what terms.

Case 1 : Credit Risk Management

Case Scenario :

ABC Textiles Ltd. is a long standing client of your bank, operating in the Spinning and Dyeing sector. The company has an outstanding credit facility of Tk. 12 crore, which includes Tk. 6 crore term loan, Tk. 4 crore cash credit (Hypo.) and Tk. 2 crore LTR. In the last few months, the following issues have raised concern :

(i) The company delayed it's last two term loan installments and requested rescheduling.
(ii) Sales declined due to rising raw materials costs and loss of a major export buyer.
(iii) Stock audit showed inventory level lower than what was declared earlier.
(iv) The borrower failed to submit updated financial statements and insurance renewals.
(v) CIB report indicates that the company has overdue positions in two other banks.
(vi) Management claims the situation is temporary and new export orders are under negotiation.

Tasks :

The branch has reported the account to the CRM Deptt. for necessary guidance and early action. As a Credit Manger, evaluate the account and suggest actions to manage and mitigate risks :

The ABC Company makes a single product with a sale price of Tk. 15 and variable cost of Tk. 9 per unit. Fixed costs are. Tk. 30,000 p.a. Current sales are 6000 units.

Required :

Briefly answer any five of the following questions :

Compare and contrast between any five of the following :

Faruk Enterprise availed a loan from Global Commercial Bank Ltd. The present loan outstanding is Tk. 120 lacs. There is 06 lacs taka unrealized interest in the interest suspense account. Other information are as follows :

(i) The market value of mortgaged land is Tk. 80 lacs.
(ii) The value of a Tin shed structure on the land is Tk. 8 lacs.
(iii) The value of pledged goods is Tk. 50 lacs.
(iv) FDR value of Tk. 32 lacs is kept lien against the loan.
(v) Present classification statues: Substandard (SS).

Reqd :