Answers (2) |
k7
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Dec 25, 2006,8:50 pm
| A Financial Institution or a Relationship Manager in Financial Institution follow a standardised process of going through the company's credit. The Manager will look at their balance sheet to see how they have been spending their money and whether they have been paying their creditors. It's just like when one looks for a job, you would have to have the right qualifications and a good health record. An employer would not hire someone who does not have the right qualifications or is unhealthy. You would be a liability to the employer. Same for the bank/ the Relationship Manager he want companies that are healthy that the bank / the Relationship Manager can derive profits from, companies that would be an asset, not a liability. |
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k7
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Dec 25, 2006,8:56 pm
| But of course, some companies do get into trouble even when they produce a healthy financial balance. This happens sometimes due to the unpredictable economic scenario. So the Relationship Manager in a financial institution make sure there is a back plan for them to pay them back - its called the collateral |
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