As a credit analyst for Ledig Commercial Bank, you assess client applications for term loans and other facilities. Mogwase Steenwerke Beperk, a brick manufacturing enterprise, requires an overdraft facility and provides you with the following details:
- Current assets of R15m
- Current liabilities of R8m
- Net sales of R25m
- Debtors’ collection period of 30 days
- Quick ratio of 0.97x
- Mogwase Steenwerke Beperk does not have any pre-paid expenses.
I.Calculate the following:
a)current ratio
b)level of inventory
c)receivables
II.What is your recommendation to the credit manager?
