Validation of a trading company

A trading company dealing in tableware, cooking and household products, which buys products in the Far East and sells to major food retailers around the world, expected its turnover to double. This would be the result of extending its activities to new markets, such as the United States, Australia and New Zealand. This growth entailed a much greater need for credit, and it changed the organisation’s risk profile. The primary banker had serious doubts about the extent to which the company’s finances and management were under control. We analysed the forecasting methods used, validated the forecasts, and conducted a sensitivity analysis as well as a risk analysis of the company. We also advised the company on structuring its credit requirements: the outcome was a line of credit in the form of commercial finance, in combination with an injection of capital. In the following year, we were asked to update our analysis.

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