Part 1
Financial Analysis
As a recent graduate, you considered yourself lucky to land a credit analyst position at one of the leading financial institutions in Canada. Part of your job included analyzing financial information of existing client accounts and recommending appropriate courses of action.
This morning, you received a new file to look at. The firm, Smith & Giant (S & G), had been clients of the bank for over 60 years. In fact, the bank had been the only lender to the firm over the 60 year period. Earlier this year, you had been invited to visit the firm's premises to review the production line, as well, you had been invited to their annual golf tournament and employee awards banquet along with your supervisor. From what you could remember, this seemed to be a firm with class, the management was professional and cordial, information was always on time and any problems that the firm anticipated were quickly relayed to the bank.
The firm is involved in the custom design and manufacture of prefabricated houses, trusses and insulated wall units. They primarily sell to home builders and developers but also sell directly to the public. In the last few years, the firm ventured into the construction industry themselves, using their products for building deluxe multi family units.
Earlier this week, your supervisor Leigh Grant talked to you about S & G. She told you that the firm was due for their annual review and would be looking for large increases in the operating line of credit plus a new long term loan for equipment purchases. Your supervisor also spoke about how S & G had been purchasing new technology over the past few years and the fact that the new e ...