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Would you recommend renewing the loan or demand repayment

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In 2008, the company paid its suppliers much later than the due dates; also it was not maintaining financial ratios at levels called for in its bank loan agreements. Therefore, suppliers could cut the company off, and its bank could refuse to renew the loan when it comes due in 90 days. On the basis of data provided, would you, as a credit manager, continue to sell to D'Leon on credit? (You could demand cash on delivery-that is, sell on terms of COD-but that might cause D'Leon to stop buying from your company.)

Similarly, if you were the bank loan officer, would you recommend renewing the loan or demand its repayment?

Would your actions be influenced if in early 2009 D'Leon showed you its 2009 projections along with proof that it was going to raise more than $1.2 million of new equity?

Reference no: EM131105959

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