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Credit Engineering for Bankers, 2nd Edition by Johnathan Mun, Morton Glantz

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Chapter 4 Credit Analysis of Seasonal Businesses: An Integrated Approach

Chapter Outline

  • Types of Seasonal Businesses 61
  • Successful and Unsuccessful Seasonal Cycles 62
    • An Example of a Successful Season 64
    • Another Example of a Successful Season 64
  • Techniques for Evaluating Seasonal Lending 64
    • Cash Budgets 64
    • Trial Balance and Break-Even Inventory 65
    • Seasonal Ratio Analysis 67
    • Break-Even Shipments 67
      • Example of Break-Even Shipments 68
    • Early Warning Signs of Trouble 68
  • Defensive Measures 70
    • Working Capital as a Defensive Measure 70
      • Cash Flow versus Working Capital Analysis 70
      • Mechanics of Working Capital 70
    • Case Study: Finn Coat 72
      • Steps to Complete a Finn Coat Manufacturing Analysis 72

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