Assume that you work for a commercial bank as a junior associate of its enterprise lending business. Your job is to research and report to your supervisor on whether to recommend a loan to the enterprise clients.

Today, you receive a call from the staff of the Chief Financial Officer of Groupon for a short-term loan (10 months) of $10 million. Your task is to analyze whether your bank should agree to loan the company $10 million. A loan of this size means that you will get a good bonus if the loan is approved. However, it also means that you may get into trouble if the client is unable to pay off the debt.

Groupon (GRPN) is a market place that connects merchants and consumers. When it went public in 2011, the company had a stock price more than $500. However, due to various reasons, the company has suffered from revenue decline and low profitability in the past few years. Groupon was especially strongly affected by the COVID-19 pandemic and incurred a large loss in 2020. Nevertheless, you know that Groupon is still a public company with many users and you wonder whether your bank is able to bear the risk of lending to Groupon.

Research on Groupon' financial performance and write a report to your supervisor to report your conclusion of whether to extend the loan to Groupon. Your report should include the necessary tables and financial information. Please include the following items in your report. The deliverable should be a MS Word document with tables showing the financial data and your analysis of the financial ratios (you may cut and paste the tables from MS Excel or any similar application onto MS Word).

1. A brief discussion of the company's business and sources of income (5%)
2. The trend analysis of company's revenue growth in the latest quarters and past three years, and the projection (from either Groupon management or outside sources) of its revenue growth in the coming two years (you will need to discuss the revenue sources of Groupon and whether you believe that Groupon is able to expand its revenue source in the next year) (10%)
3. The trend of Company's profitability in the past years (5%)
4. Company's ability to generate cash flows and whether the ability is stable (10%)
5. Company's solvency status (5%)
6. Company's cash payment commitment to its current debtholders (interest expense) (10%)
7. The sources of the company's cash flows. Does the company generate cash flows from its operating activities, from investing activities (by selling business or investment assets), or from raising equity or borrowing debt? [Information of this is from the Statement of Cash Flows] (10%)
8. The potential impact on the net income, return on assets, and debt-to-asset ratio if ALL of Company's "goodwill" on the balance sheet is considered impaired and of no value [Hint: if goodwill is of zero value, Groupon has to write off the value as a loss and remove goodwill from its total assets.] (10%)
9. Discuss Company's commitments and contingencies and analyze whether these contingent liabilities pose a serious threat to Company's ability to continue its operation [There is a financial statement footnote on the commitments and contingencies.] (10%)
10. Your conclusion on whether to extend this loan to Groupon. If you recommend to make the loan with conditions (covenants) that Groupon has to abide, please include them in your reports. Loan covenants may include restriction from paying additional dividends to the shareholders, restriction from repurchasing its own stocks, restriction from selling tangible assets, restriction from getting a loan from other creditors and mergers and acquisitions without the approval from your banks, etc. Note that Groupon may go to another bank to borrow money if your bank put too many restrictions. (15%)
11. A structured report with complete sentences that are free from grammar errors and use the tables or figures with computation process in your discussion (10%)