Do you believe the credit risk has increased

Reference no: EM13925009

Mr X has recently joined as Relationship Manager of PQRZ Bank. As he was going through the latest financial statements of Hypothetical Manufacturing Ltd, he found the following information:

$ in millions

Particulars	31.12.20X8	31.12.20X9
a. Average stock holding period	75 days	140 days
b. Average debtors collection period	90 days	187 days
c. Average creditors payment period	92 days	29 days
d. Tangible net worth	25m	11m
e. Bank borrowings	12m	27m
f. Profit for the year	7m	0.5m

Is there any deterioration in the working capital cycle during the year ended 31.12.20X9? Do you believe the credit risk has increased? Have the owners of the Hypothetical Manufacturing Ltd withdrawn funds from the business as dividends? Explain your views and possible mitigation steps, if required.

Reference no: EM13925009

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