Credit and Lending Decisions Question Answer 2022

Running head: CREDIT AND LENDING DECISIONS
Credit and Lending Decisions
Name of the Student:
Name of the University:
Author Note

1CREDIT AND LENDING DECISIONS
Table of Contents
Part A: First National Corporation Analysis........................................................................2
Answer to Question 1.............................................................................................................2
Answer to Question 2.............................................................................................................4
Answer to Question 3.............................................................................................................5
Answer to Question 4.............................................................................................................6
Part B: Edward Altman: Where Are We in the Credit Cycle?...........................................9
Answer to Question................................................................................................................9
Reference list...........................................................................................................................15

2CREDIT AND LENDING DECISIONS
Part A: First National Corporation Analysis
Executive Summary
The report is prepared for the analysis of First National Corporation. The compatibility of
First National with the image and tradition of asset based lending has been explained. The
improvement in the asset based lending due to the improved return on net worth along with
the return on assets has been discussed. The deposit composition of First National for the
necessary finding of high yield earning assets than are currently booked have been
emphasised. The venture by First National in its asset based lending parallel banks’ lending
practices before the recent global financial crisis have been justified.
Answer to Question 1
Asset-based lending is a variety of lending that is secured by the asset. It means that
the assets are taken in case the loan has not been repaid. Mortgage is a sample of the load
based on asset. The term is commonly used for describing the lending to large corporations
and business that use assets which are generally not used in other types of loans
(Angilella&Mazzù, 2015). The loans are generally related to machinery and equipment,
accounts receivable and inventory. This type of lending is more particular in the countries
where the legal systems permit the borrowers to vow these assets to the lenders in the form of
collaterals for the loans by creating enforceable security interests (Kiviat, 2017). The
compatibility of the tradition and corporate image of the asset based lending philosophy by
First National Corporation has been analyzed. Bob along with the newly created team of
people felt the urge to review the financial information of BHC for its ways of the asset
lending that may have an impact on the profit position and balance sheet (Byanjankar,
Heikkilä&Mezei, 2015). The proposed product required reviewing of the developed projected
income statement and balance sheet so that it provided a foundation for comparison. The