ssume that you started a new business last year with RM30,000 of your own money to purchase equipment. You are seeking a RM100,000 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 car as a security for the loan. Your family member has agreed to become the guarantor. During your initial year of operation, you paid your supplier in 30-day credit. (a) Assume that at the end of next year you will have an accounts receivable balance of RM15,000 and an inventory balance of RM30,000. If a bank lends an amount equal to 80% of accounts receivable and 50% of inventories pledged as collateral, estimate the amount that the bank might consider for a bank loan a year from now

ssume that you started a new business last year with RM30,000 of your own money to purchase equipment. You are seeking a RM100,000 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 car as a security for the loan. Your family member has agreed to become the guarantor. During your initial year of operation, you paid your supplier in 30-day credit. (a) Assume that at the end of next year you will have an accounts receivable balance of RM15,000 and an inventory balance of RM30,000. If a bank lends an amount equal to 80% of accounts receivable and 50% of inventories pledged as collateral, estimate the amount that the bank might consider for a bank loan a year from now

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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Question

Assume that you started a new business last year with RM30,000 of your own money to purchase equipment. You are seeking a RM100,000 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 car as a security for the loan. Your family member has agreed to become the guarantor. During your initial year of operation, you paid your supplier in 30-day credit. (a) Assume that at the end of next year you will have an accounts receivable balance of RM15,000 and an inventory balance of RM30,000. If a bank lends an amount equal to 80% of accounts receivable and 50% of inventories pledged as collateral, estimate the amount that the bank might consider for a bank loan a year from now.

Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.

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