Corporate Finance Institute®

Advance your career

5 Cs of Credit Case Study – Workbook

Part 1 – Character
Read the Caskey Trucking Case and identify the strengths and weaknesses of the
management.

Strengths Weaknesses

Past Have an experience of his all the

Performance adult life into the business

Reputation Bill is a hard worker

Planning

Experience/
Stability

Attitude
Towards Risk

Overall
Conclusion
 Corporate Finance Institute®
Advance your career

Part 2 – Capacity
Read the Caskey Trucking Financials and the Caskey Trucking Case to identify the
strengths and weaknesses of the company’s capacity.

Strengths Weaknesses
Concentration or dependence of
sales on the parents
Consistent sales over the past years
Sales

As the truck is already 8 year old so

it does not have much life left

Assets Bill has a truck of its own and does

not have any lien on it

Profits are pretty in consistent and

does not follow a consistent path
Profits are pretty good and are
Profits increasing

Have a lot of personal debt and

poor repayment history
Does not have any debt on business
Debt

Overall
Conclusion
 Corporate Finance Institute®
Advance your career

Part 3 – Capital
Read the Caskey Trucking Financials and the Caskey Trucking Case to identify the
strengths and weaknesses of the company’s capital.

Strengths Weaknesses
Poor working capital ratio as it is
Company is paying its debtor timely below 1
and bills payable are decreasing day Account receivables are increasing
Quality & by day YoY
Management
of Working
Capital

Extremely leveraged capital strucute

can be seen and that further
leverages to 5.54 after the loan
Funded debt to EBIDTA is somehow Funded debt to equity ratio is also at
Leverage in a average position at .39 its extreme level

Retained earnings

Other
Sources of
Capital

Overall
Conclusion
 Corporate Finance Institute®
Advance your career

Part 4 – Collateral
Read the Caskey Trucking Financials and the Caskey Trucking Case. Identify the
availability and quality of the collateral.

What Is the Available Collateral?

Two new trucks that will be bought out of financing

Collateral One

Marketable
Yes they are marketable

Ascertainable Yes

Stable No

Transferable yes

Collateral Two
Marketable

Same
Ascertainable Same

Stable Same

Transferable Same

Overall Conclusion
The company might have collateral but the price of those might not be the same as trucks
depreciates in values
 Corporate Finance Institute®
Advance your career

Part 5 – Conditions
Read the Caskey Trucking Case and identify the strengths, weaknesses, opportunities,
and threats of the company.

Strengths Weaknesses

Opportunities Threats

Overall Conclusion