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Bank loans

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(Querist)
26 September 2012 What are the important ratios banks will look into the analysis of balance sheet and P & L while sanctioning the Term loan/working capital loan? What is the minimum acceptable level in each ratio?
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Jagga Rao Malipeddi

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Jagga Rao Malipeddi (Expert)
28 September 2012 There are many ratios bankers look into while sanctioning loans.
However for Working Capital the most important is Current Ratio to know whether the party is having sufficient current assets to meet the current liabilities.
For Term Loans the most important ratio is DSCR. Debt-Service Coverage Ratio - to assess whether the party would be in a position to service the debt.
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