If the bank decides to withdraw the entire line of credit and to demand immediate repayment of the two existing loans (the short-term and long-term loans) extended to Garden State Corp., what alternatives would be available to Garden State?
I can not figure out any alternative except looking for assets to pay it off. Please help. Attached is an excel sheet to help with the question.
At the outset please note that from the financial statements that you have provided the company seems to be in good financial health. The current and the liquidity ratios are acceptable, the leverage ratios that is the Debt ratio and TIE coverage have actually improved, fixed asset turnover has also improved and there are no really condemnable ratios because of which the bank might decide to withdraw its loans. In addition, the retained earnings are rising, long term debt has declined and there seem to be no financial reason for the bank withdrawing the long term loans or short term loans.
In this situation, the most obvious alternative is to seek another bank which will lend to the company, since Garden State Corporation is a financially sound company, any other commercial or ...