Instructions
• Type answers using Microsoft Word.
• Write brief answersand avoid longor general answers.
• Write the answers in your ownwords and avoid copying from the Internet.
Course Learning Outcomes:
1) Introduction to Bank BalanceSheet.
2) Negotiable Instruments and endorsements.
3) Banking Risk Management, Bankers lending techniques : General principles and forms of lending, Small Business Lending, Corporate Borrower-Procedures & Precautions.
4) Financial Statement and Financial Ratios.
5) Central Bank
1. How do Banks measure their performance.
2. Discuss the types of negotiable instruments and give an example for each type.
3. Discuss the check payment process. Use a diagram to help support your answer.
4. Jamalisan employee in a private company. His monthly salary is AED 12,000. He has been working for this company for five years as an assistant manager. Jamal applies for a personal loan for AED 300,000. After completing the application, the loan officer asks Jamal about his collateral and monthly expenses. Jamal explained to the loan officer that the collateral is his monthly salary of AED 12,000 and his average monthly expenses is AED 8,000 according to the bank statements and other documents for the last two years.
a. assume the loan is AED 380,000 (including the principal and the interest), and will be repaid in 48 months. You are a credit analyst at the bank. Will you lend Jamal the money requests? Explain why or why not.
b. In your opinion, what is the maximum loan amount the bank should lend Jamal assuming his monthly salary and average monthly expenses do not change.
5. To minimize the potential default for the borrower, what should the credit department at the bank do?
6. Assume you work in the credit departmentat BOA Bank and you received a Balance Sheet and Income Statements for 3 Years from a new potential Borrower (COSTCO Company) applying for a loan. Use the Balance sheet and the Income Statements to answer the following questions:
1) Fill in the Financial Ratios for 2012, 2013 and 2014 in the blank table below. Support your answers by showing your work.
2) Compare the financial ratio of 2012, 2013 and 2014 to the industry.
3) Calculate the Change in Net Income from 2012 to 2013 and from 2013 to 2014, give two possible explanations for the change.
4) In your opinion, how is the potential borrower's Financial Statements performance?
Balance Sheet for COSTCO company as of 31/12/2012, 2013 and 2014
COSTCO's Income Statements for the last 3 years 2012, 2013 and 2014.
Attachment:- Assignent-1.rar