Easy Electrical Enterprise is a medium size firm which deals in the import and whole sale of electrical goods such as cables, sockets, adapters and switch boards. The CEO, Mr Ephrain, like many of the board members and management are highly educated and skilled in the merchandise business. With increasing competition in the industry, Easy Electricals had been struggling to generate the required cash resources from revenue. In 2019, management resolved to extend its business currently limited to Accra, to three other cities; Kumasi, Takoradi and Sunyani. This will required a three-fold increase in their annual imports in order to reach their revenue goals of which 60% is forecasted to come from the three added cities. This means in the coming year 2020, they would need to borrow to the tune of Gh18 million. Upon consultations with GCB, the bank is considering the extension of the required credit for a duration of 5 years that will require Easy Electrical to make annual payments of Gh4.5 million. GCB has conducted its own investigations and has confirmed that, currently Easy Electricals has no long-term loan payment obligations - the last was settled at the end of year 2019 with Fidelity Bank. Key suppliers of Easy Electricals confirmed a prompt payment regime by Easy Electrical for the purchase of goods and rightly informed suppliers if their obligations would be constrained. Key customers and regulators were also largely positive about their dealings with Easy Electrical. Furthermore, Easy Electrical has significant equity contribution by the shareholders (owners) as can be seen from the financial statement extract. Nonetheless, credit analysts of GCB also forecast that, inflation and exchange rates will rise significantly for the next five years whiles lending rate (interest rate) is likely to remain stable. To reduce the credit risk exposure, Easy electrical has agreed to purchase an insurance cover for the loan over the course of the five years to guarantee annual payments to the bank in case of default. On the part of GCB, within the 5-year tenure of the loan, Easy Electrical is not allowed to take on additional loan liabilities until 75% of the loan principal has been paid. Moreover, the borrower is also required to inform the bank of any inability to make payment obligations 3-months in advance before due or else pay a penalty. Required: Provide a critical analysis of the credit worthiness of Easy Electrical Enterprise using the 5Cs Pillars of Credit. Analysis should primarily be inferred only from the content of the case and the financial statement extract. You may compute relevant ratios to help your discussions. Provide a conclusion as to whether or not GCB should or should not extend the loan to Easy Electrical based on your analysis. An extract of Easy Electricals financial statement is provided on the page following: Financial Extract for Easy Electrical Enterprise All amounts are in thousands of GH) Income Statement Items: 2018 2019 2020* 2021* Revenue 40,839 35,348 52,164 58,077 EBIT 12,396 4,810 11,902 7,519 Net Profit 13,406 5,806 12,291 8,155 Cash flow Items: Net Operating Cash flow 11,091 4,469 9,267 7,935 Net Cash flow from Investing (3,214) (7,432) (8,143) (7,682) Net Cash flow from Financing (2,340) (2,654) (1,122) (2,408) Statement of Financial Position Items: Cash & Cash Equivalent 13,008 7,391 7,393 5,238 Current Assets 20,949 15,417 18,707 19,215 Non-current Assets 22,312 30,507 38,956 46,174 Current Liabilities 2,726 2,264 2,874 4,903 Non-current Liabilities 6,230 6,230 0 0 Equity 31,579 35,166 51,915 55,583 (*) are forecasted years