CLR
Showing 225–240 of 345 results
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Back to Basics — Family ties might belie good judgment
August / September 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 497
Abstract: Lenders often develop their closest relationships with family businesses. But, as they get to know a company’s family members, they may unearth questionable business practices that jeopardize debt service, especially as the company transitions to second-generation ownership. As this article explains, having family members on the payroll is just one example of a related-party transaction. Other areas to watch for are variable interest entities, commonly owned suppliers and customers, quasi-business expenses, and related-party loans.
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Being on the lookout for fraud
August / September 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 729
Abstract: What causes fraud to ignite in a company? And what should a lender know about conditions that make fraud possible — and even likely — to happen? This article discusses the “fraud triangle” that triggers occupational fraud and offers tips for preventing it among employees and executives alike.
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Bad debts, bad to the bone — Assessing the allowance for doubtful accounts
August / September 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 712
Abstract: Borrowers frequently pledge accounts receivable as collateral. But what’s on the balance sheet might not be what the borrower collects — even if the business sets aside an allowance for doubtful accounts. These allowances are subjective and can be difficult to audit, especially in uncertain economic times. This article discusses the direct write-off and allowance methods for assessing an allowance for doubtful accounts, along with the likelihood of collectibility for aging receivables.
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Know thy borrower’s industry
August / September 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 780
Abstract: Prudent lenders take the time to genuinely understand each customer’s industry. This article offers some steps that lenders may find useful when approached by a borrower in an industry with which they’re unfamiliar. It shows how to define the industry and determine where it’s headed, and what to look for among suppliers, vendors and customers. A sidebar explains how to conduct an industry analysis.
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Back to Basics — Disclosures lessen risky business
June / July 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 461
Abstract: Some private firms refrain from disclosing risk factors, because they worry that it will detract from positive reporting content or scare away stakeholders by admitting certain threats and weaknesses. But it’s the other way around: Experienced investors and lenders understand that risk is part of every business scenario. This article discusses why risk factor disclosures are important.
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Tools of the trade — 3 ratios to help you size up borrowers
June / July 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 647
Abstract: Financial ratios can be an excellent tool for pinpointing businesses that deserve credit. One popular ratio, return on equity, or ROE, shows how much a company earns for each dollar its owners have invested. But lenders who conduct DuPont analyses gain additional insight by expanding this classic measurement into three underlying components: profit margin, total asset turnover ratio, and a comparison of total assets to equity. This article shows how, even with their limitations, ratios can be a highly useful analytical tool.
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The optimal capital structure — The right blend of debt and equity is key
June / July 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 696
Abstract: Private business owners are often gun-shy when it comes to taking on debt, as it adds risk to the business. But a reasonable level of debt enables borrowers to grow faster and build value for equity investors. This article points out the advantages of limited debt and explains how a select blend of debt and equity can maximize a company’s value.
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Handling mixed accounting methods before “little GAAP”
June / July 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 963
Abstract: Lenders must deal with a mishmash of accounting standards when reviewing borrowers’ financial statements. Some companies follow Generally Accepted Accounting Principles (GAAP), and some use tax or cash basis methods. Others adopt International Financial Reporting Standards for small and medium entities, or they use other comprehensive bases of accounting. This inconsistency creates due diligence headaches. This article discusses the pace of progress toward establishing a simpler form of GAAP — “little GAAP” — for smaller companies, while a sidebar lists specific areas where GAAP is problematic.
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Interim reports have pluses, minuses – and limitations
April / May 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 611
Abstract: Businesses generally release annual financial statements to let interested parties, including lenders, evaluate their financial health. But proactive lenders should want more than one “snapshot” per year of their borrowers’ financial well-being. This article looks at how interim financial reports can be invaluable in revealing changes in the borrowers’ stability, but also shows that these reports have certain drawbacks and limitations.
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Back to Basics — What if …?
April / May 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 457
Abstract: Financial statements show how a company has performed in the past. But historic data doesn’t necessarily predict future performance, especially in an uncertain, volatile market. Projections and forecasts better gauge default risk, but this article shows how lenders can take the process one step further through scenario and sensitivity analyses.
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Taking a backdoor approach to due diligence
April / May 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 778
Abstract: Lenders who understand the details underlying business operations are better able to minimize risk — and maximize return. This article shows how to think beyond financial statements and tax returns, and look for skeletons in the closet — and hidden opportunities. It explains the importance of determining whether the company has key people who are there for reasons of competence rather than nepotism and that it has annual insurance reviews to ensure adequate coverage.
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Ready, set, restructure
April / May 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 861
Abstract: Missed payments, maxed out credit lines, management turnover and unreturned phone calls are just a few of the precursors that indicate it’s time to recommend a restructuring specialist to assist the distressed borrower. This article explains how a specialist can identify costs that can be cut and noncore assets that can be liquidated. It also explains why forgiving or restructuring debt might be advisable. A sidebar discusses ways a restructuring specialist can recommend creative alternatives to improve cash management.
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Back to Basics — Zero in on concentration risks
February / March 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 489
Abstract: Too much reliance on one customer or supplier can be dangerous. This article shows how to identify risky accounts not only by asking borrowers to provide a list of major customers and suppliers, but by checking external sources as well. It also explains why it’s helpful for borrowers to analyze the gross and operating margins for all major customers.
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How to tackle poor cash flow
February / March 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 699
Abstract: If a small-business customer is constantly losing the battle against cash going out vs. cash coming in, what can its lender do? The answer lies in the lender’s familiarizing the customer with the concept of a cash flow gap and showing how to narrow it. This article explains how to calculate a cash gap, and how companies can reduce it by keeping inventory lean and improving collection procedures.
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Making out-of-step borrowers look normal
February / March 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 896
Abstract: No two businesses look exactly alike, but lenders often compare borrowers in the same industry to one another or themselves over time to get a better understanding of a borrower’s past and future earning power. Such comparisons require “normalizing” reconciliations to the income statement and balance sheet. This article offers a summary of the most common categories of financial statement reconciliations that lenders encounter, including different accounting practices, one-time charges and collateral. A sidebar explains how to scrutinize a borrower’s discretionary expenses.
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Easy to steal, hard to reveal — Why inventory is a prime fraud target
February / March 2012
Newsletter: Commercial Lending Report
Price: $225.00, Subscriber Price: $157.50
Word count: 674
Abstract: Most borrowers pledge inventory as loan collateral. But it’s also a popular place for the unscrupulous to hide embezzlement. This article explains what makes inventory fraud so appealing and the methods fraudsters use to pull it off. It also explains how lenders can be important watchdogs in the battle against fraud.