Thursday, July 7, 2011
Manage a business risk
Many financial organization make loans solely based on collateral, they think if something happens they will have real assets as a collateral, but this assets sometimes accumulate and lenders has frozen assets, that assets have opportunity cost. What can be done to decrease this kind of opportunity cost? There are some important factors to understand before loans are made, main ones are: 1. Lender needs to learn main product and expected demand for this product for at least the term of the loan, 2. Understand company business model, make analysis and determine business value. 3. Assess management - there are some methods to assess management performance. If these minimum factors are learned and they prove healthy and attractive, than collateral can be determined.
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