FINANCIAL ANALYSIS

Financial sources for Vodafone Company

Financial sources for Vodafone Company

Introduction

Key financial areas considered by lending organization for loan application

Lending organization before approving the loan of large companies consider ten key financial areas, that are briefly discuss below.

Business plan or executive summary

Before approving the loan application of the large organization the lending organization conduct an in-depth analysis on organization business plan that comprises of (company business plan, potential customers, owners capabilities of running a business, company's future goals, and strategies that a company would adopt for accomplishing their future goals) (BBA, 2011, pp.5-15).

Investment in proposed business

Lending organization review this document to analyze the risk bearing ability of the owners of the company i.e. (Their personal investment involved in the business), and their commitment level towards their new venture. Lending organizations does not prefer to invest in organization that lacks in enthusiasm, and only expects hard work and determination from others.

Good credit history with proper explanation

The lending organization conducts an in-depth analysis on organization credit score, and other important information to identify the level of risk faced by the organization in repayment of collected loan (Bianco, 2008, pp. 5-30). Moreover, lending organization primarily monitor the relationship of organization with its creditors, it payment schedule, receivable policy, bank history, previous unpaid loans and reasons for late payments, and others.

Use of cash proceed

Lending organization pays key interest in identifying the total cost of the project, total amount borrowed for different sources, level of equity financing, and proper framework of utilizing the loan amount. Lender prefers organization to provide detail information of above elements with additional documents including notes of equipment, list of order purchased, proper and accurate list of calculated amounts, and other information that could convey lender your primary objective of acquiring this loan amount.

Request of amount and loan payment terms

Lending organization on an average received thousands of loan application requests that does not clearly specify the actual amount of loan, and thus does not specify the time required by applicant to repay the loan amount (FSA, 2010, pp. 15-25). In this situation, lending organization is left with two options, first is to reject the loan application, and second to draft an assumption based loan plan that might or might not satisfy the need of loan applicant. In order to resolve this issue, lending organizations has instructed loan applicant to include (exact amount of loan, type of loan, repayment time, fixed or variable interest rate, or specific interest rate for specific purpose, and others.

Historical financial statements with proper explanation for existing business

Lending organizations primary goal is to ensure that loan applicant is repaying the loan amount on specified time. If loan application is requested by existing business organization then lenders normally request the applicant to provide three years historical financial statements with proper explanation, because with these lender will analyze company net income, and its ability of paying long-term depts.

Projection of cash flow

It is often observed that historical financial information provided by the organization is not sufficient to impress ...