RSK4804
ASSIGNMENT 1 2024
, 2024 Assignment 1 – RSK4804
ASSIGNMENT 01 Due date: 26 April 2024 Unique number 546485
Aim: To evaluate your knowledge of some of the fundamental aspects of credit risk
management.
Answer the following questions and submit your assignment on myUnisa, at
https://my.unisa.ac.za. Limit your assignment to a maximum of six pages. Use Times
New Roman, font size 12.
Question 1 [20]
1. Explain why credit is considered a powerful driver of the economy. (5)
2. Outline the credit process of your preferred lending organisation (banking
services or retail) and in your own words, provide details of each phase.
(15)
Conditions:
(a) Physical visit to the entity or telephonic contact is a must –
originality is required.
(b) Any “cut and paste” from resources will not attract marks.
Question 2 [5]
The General Manager of Moroka Transport Investments approached your bank for a
credit facility. The following are ratios for Moroka Transport Investments for the 2023
financial year.
• Working capital to total asset ratio = 14%
• Retained earnings to total asset ratio = 23%
• Profit before interest and tax to total assets = 19%
• Market value of equity to book value of debt = 115%
• Sales to total assets = 122%
Based on Altman’s Z-score, calculate the risk of bankruptcy for Moroka Transport
Investments. Briefly comment on the credit decision you make based on the calculated
Z-score.
Total [25]
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ASSIGNMENT 1 2024
, 2024 Assignment 1 – RSK4804
ASSIGNMENT 01 Due date: 26 April 2024 Unique number 546485
Aim: To evaluate your knowledge of some of the fundamental aspects of credit risk
management.
Answer the following questions and submit your assignment on myUnisa, at
https://my.unisa.ac.za. Limit your assignment to a maximum of six pages. Use Times
New Roman, font size 12.
Question 1 [20]
1. Explain why credit is considered a powerful driver of the economy. (5)
2. Outline the credit process of your preferred lending organisation (banking
services or retail) and in your own words, provide details of each phase.
(15)
Conditions:
(a) Physical visit to the entity or telephonic contact is a must –
originality is required.
(b) Any “cut and paste” from resources will not attract marks.
Question 2 [5]
The General Manager of Moroka Transport Investments approached your bank for a
credit facility. The following are ratios for Moroka Transport Investments for the 2023
financial year.
• Working capital to total asset ratio = 14%
• Retained earnings to total asset ratio = 23%
• Profit before interest and tax to total assets = 19%
• Market value of equity to book value of debt = 115%
• Sales to total assets = 122%
Based on Altman’s Z-score, calculate the risk of bankruptcy for Moroka Transport
Investments. Briefly comment on the credit decision you make based on the calculated
Z-score.
Total [25]
Powered
Poweredby
byTCPDF
TCPDF(www.tcpdf.org)
(www.tcpdf.org)
