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Good morning! I have a meeting with the bank in a few days and require your assistance in order to prepare for the meeting. I
Good morning! I have a meeting with the bank in a few days and require your assistance in order to prepare for the meeting. I need to secure some additional funding from the bank. Right now I am looking at arranging a bank line of credit for $150,000 max. The bank has informed me of the following restrictions on operating lines: 75% of receivables less than 90 days old, and 45% of finished goods inventory. Here are the details of our accounts receivables, inventory and debt-to-equity information: Accounts receivable, $100,000 of which 10% are over 89 days Raw materials inventory, $30,000 Finished goods inventory, $120,000 Total liabilities, $425,000 Total equity, $600,000 Would you please calculate the maximum the bank will lend us through an operating line? Also, assuming the bank requires us to have a debt-to-equity ratio of no worse than 0.5 to 1, would we qualify? Lastly, I have an outstanding (credit) balance in the Due to Shareholder account. I was advised by our public accountants to register the debt with the Personal Property Security Act (PPSA) just to be on the safe side. Are you able to explain the key elements of the PPSA in your own words so I understand what it is and how I use it? I don't need a novel, just a paragraph will do. I really don't understand these details. If you could summarize these three things in a memo back to me, I would greatly appreciate it. I need it for 1 pm today. Please send me your calculations in Excel so I can show the bank. Thanks
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