Decision Analysis Report: Evaluating Loan Agreement Conditions

This report provides a detailed analysis of a loan agreement using decision analysis techniques. It begins with an introduction to decision analysis and its importance in complex financial situations. The report then presents a financial analysis of a company, including key ratios such as asset turnover...Read More

DECISION ANALYSIS

INTRODUCTION
 The quantitative field, related to the operations of research that trades with the
examining, modifying, and modeling decisions successfully made by the single,
group or organization.
 The main purpose of the decision analysis is that it helps the decision makers in
building the best decision in the complex situations.
 It is very crucial for decision makers to take judgment in tangled condition in an
enterprise field.
 In this report the decision maker of the firm has taken help of this tool in order to
find out the problem of uncollected debts.
 This report will provide the detailed information about the finances of the ratio so
that it can be assess that bank can provide the loan extension or not.
 It will also provide the detail synopsis of the different types conditions in loan
agreement with their purposes.

Contrasting the financial position of the business with
the help of financial ratios.
Particulars Formula Details Ratio
Asset Turnover Ratio Net sales 160000 5%
Average Fixed Assets 2950000
Debt to equity ratio Total liabilities 3500000
0.0172
%
Total shareholder equity 2030000
Current ratio Current assets 1620000 0.98
Current liabilities 1660000
Quick ratio Current assets- inventories 820000 0.49
Current Liabilities 1660000
Accounts receivable turnover Net credit sales 160000 22 days
Average Accounts receivable 740000

1.2 Providing that company should
met the loan agreement or not
There are some essential requirements to met the loan agreements are discussed under.
Collateral
 Organization must have the hard assets in order to back up the loan. They look on these assets very
carefully to make sure that bank can reduce the risks.
All the details of the business
 Bank will check all the financial of the Needy Ltd before sanctioning the loan.
Detail of absolute account receivables.
 The information of accounts receivables considers the data about account for analyzing credit sales,
and defrayal history.
Details of account payable
 Information about account payable considers the substance about conduct of administration while
repayment.

1.3 Describing the purpose of the conditions in
loan agreements.
The purpose of conditions of the loan agreements are discussed under individually -
Collateral
Collateral is the property which borrower offers lenders in order to secure a loan.
Account receivables
Inside the organization there resides lots of account that are sales account, purchase account, for
the careful analysis of the finances can be.
Credit history
In the finances of the business credit history plays an important role. It is solid proof for the
business capacity to pay back the liabilities. The credit history includes the following information-
•Credit account's number
•Owed amount
•How long each account has been open?
•Availability of amount in credit cards.

Cont.………..
Business finances
 The purpose of the business finances is to provide the exact information about the business position
of the Needy Ltd.
Account payables
 Account payables of the organisation includes the information about the behaviour of the borrowers.
Future ratios
 To evaluate loan applications for an individuals Bank uses the financial ratios. Organization kept
these ratios in order to get lender satisfy before granting the loan .
. Financial statements
 Bank considered the all major financial statements. Balance sheet, income statements, and the
statement of cash flow were carefully checked by the bank officer in order to check the viability
weather organization should repay the loan.

CONCLUSION
 While concluding this report, it is said that decision analysis is the best tool to measure the
organization financial health.
 The present report has contrasted various ratios like current ratio, quick ratio, account turnover
ratio etc. in order to identify the position of the Needy Ltd.
 Company has almost fulfilled all the essential requirements of the bank loan agreement. The
present report has also discussed the various requirements of the loan agreements with their
purposes.
 By summing up, this study it is found that decision analysis is a crucial tool for decision makers
in difficult situations.
 The possibility of decision analysis aid decision maker to evaluate systematically about business
objectives, purposes, induction, fundamental laws quality and other essential aspects of exertion
and their inter-relatedness.

REFRENCES
Books and Journals
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evaluation of sustainable energy systems: A review. Renewable and Sustainable Energy Reviews. 47.
pp.924-932.
 Greco, S., Figueira, J. and Ehrgott, M., 2016. Multiple criteria decision analysis. New York: Springer.
 Kavzoglu, T., Sahin, E. K. and Colkesen, I., 2014. Landslide susceptibility mapping using GIS-based
multi-criteria decision analysis, support vector machines, and logistic regression. Landslides. 11(3).
pp.425-439.
 Langemeyer, J. and et.al, 2016. Bridging the gap between ecosystem service assessments and land-use
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