Finance There Are a Number Essay

Excerpt from Essay :

I would advise that Mr. Haskins has to understand that the banks are businesses, and make strategic investments when they think those businesses will pay off. This means that AMD needs to ensure that the banks are happy, in order to secure financing. That means giving the banks what they need to feel secure in this investment. Receivables are not adequate collateral, for a lot of reasons, and ancient receivables are especially worthless. Likewise, giant stockpiles of inventory are not good collateral for a bank. Mr. Haskins has to understand that banks are not interested in these things as collateral, but if he gives the banks what they want he can have loans on the strength of his business.

Mr. Haskins must realize that banks are partners, but they need something out of the deal as well, and do not operate on blind faith. As such, Mr. Haskins needs to deal with banks on that level. He is more than welcome to shop around for the best deal, but if the bank senses that he feels entitled to financing on whatever terms suit him the best, then he has to expect that the bank will reject his loan application. A little more professionalism when dealing with his banks will go a long way.

Appendix a: Pro Forma Income Statement

1985

1986

1987

1988

Revenue

30848…

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