GROUP PROJECT:

An Analysis of Global Machinery and Metals Company (GMMC), and Eceiza, J., Harreis, IL, Hartl, D., and Viscardi, S. (2020) “Banking imperatives for managing climate risk” McKinsey & Company, and Greenbaum, S.I., Thakor, A.J., and Boot, A.W.A. (2019) Chapter 14

[Sources: Hempel, Simonson and Coleman 1994:772 — 775 and Eceiza, J., Harreis, H., Hartl, D., and Viscardi, S. (2020) “Banking imperatives for managing climate risk” McKinsey & Company, and Greenbaum, S.I., Thakor, Al, and Boot, A.W.A. (2019) Chapter 14]

GENERAL REQUIREMENTS:

Working in groups of 3 to 4, develop logical and coherent responses to the questions raised below. The opinions or decisions that are presented should be supported by references to appropriate texts, articles, websites, and current banking practices.

Although all students are expected to play an important role in the development of the paper, the final submission should be presented as a comprehensive group project. The following lists of deadlines and requirements should be adhered to. Failure to do so will result in a lower grade on the project.

Part A: Global Machinery and Metals Company 

SPECIFIC REQUIREMENTS / QUESTIONS:

1. Outline the mechanics of a letter of the credit arrangement. Examine the bank’s exposure to risk should it accept time drafts. In GMMC’s case what additional collateral should Motor City National Bank then obtain?
2. Examine GMMC’s financial statements and then conduct a financial ratio analysis. Does the firm have adequate collateral in receivables and inventory?
3. GMMC is requesting increases in its lines of credit to meet its sales growth. Should Motor City National Bank approve it increases in both the line of credit and the letter of credit? What special risks do you see in this situation:

• To the bank?
• To the company?

Part B:

Eceiza, J., Harreis, H., Hartl, D., and Viscardi, S. (2020) “Banking imperatives for managing climate risk” McKinsey & Company, and Greenbaum, S.I., Thakor, A.J., and Boot, A.W.A. (2019) Chapter 14

Quality is the most appropriate determinant of the grade awarded but it is suggested that approximately 2,500 words be a suitable length.