Discuss briefly the possible credit risk

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1) Sure Win Sdn. Bhd. has applied for a loan from your bank. Discuss briefly the possible credit risk, if any, your bank may face if this application is approved.

(i) Gross profit margin is low

(ii) Current ratio is below 2 times

(iii) Gearing ratio (i.e. total liabilities / total equity) is 1.5 times;

(iv) Debt service ratio is low (i.e. earnings before interest & tax / interest expenses)

(v) Efficiency ratio (i.e. asset turnover ratio) is low.

Reference no: EM133152853

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