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Bsmf 342:Financial &Amp; Credit Analysis Question Paper

Bsmf 342:Financial &Amp; Credit Analysis

Course:Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2012

KENYA METHODIST UNIVERSITY

END OF 3''RD ''TRIMESTER 2012 (EVENING) EXAMINATIONS
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING, FINANCE & INVESTMENTS
UNIT CODE : BSMF 342
UNIT TITLE : FINANCIAL & CREDIT ANALYSIS

TIME: 2 HOURS

Instructions: Answer Question ONE and any other TWO Questions.

Question One

Explain the essential steps in credit process cycle and state the objective of each step.

(15 Marks)

Name FOUR fundamental credit principles and examine the implications to the lenders.

(10 Marks)

Discuss this statement: "In every credit we should try not to reveal too much risks, otherwise management must be doubtful of our competence".

(5 Marks)

Question Two
Financial ratios are a key tool for financial analysis. Discuss how the management and the credit officer can utilize these ratios to determine the credibility of the borrower. Use all the four categories of ratios to make the decisions. (20 Marks)

Question Three

As a credit officer of a microfinance institution, you are required to determine among 10 applicants who qualifies to be lent money and whose loan applications to reject. Using the five Cs of credit analysis, describe how you will go about the task.

(10 Marks)

Compare and contrast group Vs individual lending. Describe situations where group lending is appropriate as compared to individual lending.

(10 Marks)

Question Four

There are two types of risks, systematic risk and unsystematic risk. Explain how you would deal with unsystematic risk in your organization as a risk management officer.

(10 Marks

Bsmf 342:Financial &Amp; Credit Analysis Question Paper

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