You work as an analyst for Jokull Rafnkelsson who the manager of a branch of a local bank in Reykjavik, Iceland.  The bank specializes in lending to the fishing industry. Your job is to analyze the credit application of Helgason Veidi for a loan to buy a second fishing boat.  Gunnar Helgason is the Chief Executive Officer of Helgason Veidi.  Gunnar is a long-time friend of Jokull.   

 

Jokull needs your help in preparing a Credit Analysis for the Loan Committee where Helgason Veidi's has applied for a loan to buy a second boat. Provide an analysis as well as recommendations for Jokull and the Loan committee by reading the case which can be downloaded using the following link : https://www.mediafire.com/file/ymmoodczxmyqwx9/Case+study.docx/file.  

 

Jokull has asked you to address the following points:

 

1. Your recommendation as to whether the bank should extend a loan to Helgason Veidi as well as the terms for the loan.
2.  Your assessment of the Helgason Veidi Loan application from the standpoint of the Five C's of credit analysis. 

• In your evaluation of the CAPITAL, consider the Interest coverage ratio and the Debt to EBITDA ratio for the 2015-2018 time period. 
• In your evaluation of CASH FLOW, determine if the projected cash flows for 2018 provide sufficient cash flow to support the loan. (Note:  In your calculations consider current projections with a 6% and a 7% interest rate.  Also, reconsider the projections with a 10% decrease in revenues. As well as the overall CONDITION of the business.)
• In your evaluation, consider the quality and availability of the COLLATERAL for the loan.
• In your evaluation, consider the CHARACTER of the company and Mr. Helgason. Address any concerns about Mr. Helgason's relationship with Mr. Rafnkelsson that the Loan Committee should consider.