Page 30 - CIMA SCS Workbook August 2018 - Day 2 Suggested Solutions

SUGGESTED SOLUTIONS

Also, the fact that our interest rate was higher in 2018 than 2017 is a concern (based on the total
value of borrowings, interest rate rose from 9.5% to 10.0%). Of course this could just have been
caused by market factors, but it could be that our credit rating has worsened so existing lenders
have been asking for higher returns. A detailed analysis of this will be required before we submit
our business plan. If FNG’s credit rating has worsened, we’ll need to present a plan to show how
we intend to improve it again in future.

Conclusion

It won’t be easy to convince lenders that FNG is a creditworthy business – our recent past
performance has shown a marked deterioration. However, lenders are generally more concerned
about the future than the past, so we’ll need to set out a detailed plan showing the improvements
that we expect if we incorporate some new investments and strategies.

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