Credit and Lending Decisions Technical report

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Business Finance

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ASSESSMENT ITEM 2: TECHNICAL REPORT Aligned subject learning outcomes • SLO 1: Assess how banks make credit and lending decisions, including critical analysis of financial statements and the operation of credit scoring systems • SLO 4: Analyse the challenges and developments of lending practices for SMEs Group or individual Individual assessment item Weighting and due date 45%, Due date: Week 8 submit online by 7/4/2024 11.59 pm Requirements for successful completion of this assessment item You must achieve a minimum of 50% in order to pass this assessment item. Generative AI tools cannot be used in this assessment task Generative AI use In this assessment, you must not use Generative Artificial Intelligence (GenAI) for any elements of the assessment task including the generation of any materials or content in relation to the assessment item. ASSESSMENT ITEM 2: DESCRIPTION The aim of the assessment is for you to synthesise the practical credit risk assessment by banks on corporation before granting a loan on a major project. The assessment is to develop a full borrower risk rating scorecard, incorporating all risk criteria, and to produce a professional business report and to present the findings of the report to colleagues in a professional manner. You need to identify a listed company on SGX of your choice. You need to identify a project carried out/or to be carried out by the company, or other company modified to applied to your company or create an imaginary project related to your company. The company is going to apply a bank loan to finance the project. You, acting as credit advisor to the bank, prepare a credit assessment report on the company for the project financing. Your report should include the following: 1. A description of the company background and its nature of business 2. A description of the project to be embarked 3. A financial performance and financial strength assessment of the company (ratios analysis) 4. An evaluation of the project to be embarked (investment appraisal) 5. Credit risk analysis of the company (focusing on the project financing) using one qualitative and one quantitative credit risk assessment techniques. Instructions: This assessment requires that you undertake research and present your findings in a written report. It should demonstrate quality of research and overall quality of presentation. Submission: Students will be supported in the tutorials to develop and design their borrower risk rating scorecard and analysis. Appropriate databases will be discussed in the tutorials. The Individual written report will contain the following: • Maximum word limit of 2,000 words +/- 15% (not including the front cover page and reference list). You may include an appendix no longer than 5 A4-sized pages. • Sources of information and evidence used in the report should be appropriately cited. Use APA referencing; • be the original work of the student; • be prepared from the perspective of an independent credit analyst. ASSESSMENT ITEM 2: CRITERIA SHEET (OR RUBRIC) Rubric grading criteria (45% of assessment) Levels of achievement Criteria HD 85%-100% D 75%-85% C 65%-75% P 50%-65% N 0%-50% Executive summary Insightfully outlines the critical issues Outlines the critical issues with enough Identifies the critical issues within some Attempts to outline the critical The critical issues are not and first page: with a clearly defined background background context to make the attempt to provide background context. issues but could have developed clearly identified AND/OR (CLO 1) context and the structure and content relevance of the topic clear and with The aims, objectives and key findings could the ideas more fully. Background background context not (SLO 1,4) of the report: what, why, who, when, clear aims, objectives and key findings. be more fully developed. Include complete context to the issues and content clearly defined. Include some Weighting: 5% how. Shows in-depth understanding of Shows a developing understanding of required information on cover page. could have been made more required information on cover key and emerging aspects of the key aspects of the topic. Include explicit. Include some required page. topic. Include complete required complete required information on cover information on cover page. information on cover page. page. Project evaluation Provides a succinct and critical Provides a comprehensive assessment Provides a generally sound assessment of Provides a satisfactory assessment Poor assessment of project (CLO 1, 2) assessment of project under of project under consideration based on project under consideration based on of project under consideration appraisal. Lacks research (SLO 1,4) consideration based on appropriate appropriate investment appraisal appropriate investment appraisal based on appropriate investment based on scholarly or industry Weighting: 20% investment appraisal techniques. Use techniques. Use proper data and techniques. Use generally sound data and appraisal techniques. Use think tank sources. proper data and indicators to support indicators to support the analysis. indicators to support the analysis. satisfactory data and indicators to the analysis. Demonstrates extensive Demonstrates adequate accurate, well- Demonstrates some accuracy, wellsupport the analysis. use of accurate, well-informed and informed and relevant scholarly or informed and relevant scholarly or industry Demonstrates satisfactory level of relevant scholarly or industry think industry think tank sources. think tank sources. scholarly or industry think tank tank sources. sources. Financial risk Provides a succinct and critical Provides a comprehensive analysis of Describes financial risk in general terms Attempts to conduct assessment Financial risk assessment is assessment assessment of financial risk across all financial risk across at least three without relating to the company business. of financial risk but could have unclear. No measures or data. (CLO 1, 2, 5) four categories including profitability, categories but the analysis could be Identify and use key drivers and highlighted the key points more Lacks research based on (SLO 1,4) asset utilisation and efficiency, debt more critical and clear. Identify and use performance measures generally employed fully. General discussions about scholarly or industry think Weighting: 25% and solvency and liquidity. Identify and key drivers and performance measures in financial analysis. Use data and financial key drivers, measures and data tank sources. use key drivers and performance important in financial analysis but lack ratios in a general manner but not but not clearly relevant to the measures aligned with the business discussion specifically linked to business specifically linked to the analysis. Attempts analysis. Attempts to use some and industry assessments. Use proper and industry risk assessments. Use to use some scholarly or industry think tank scholarly or industry think tank data and relevant financial ratios to proper data and financial ratios to sources but some sources lack credibility. sources but some sources lack support the analysis. Demonstrates support the analysis. Demonstrates credibility. extensive use of accurate, wellsome accurate, well-informed and informed and relevant scholarly or relevant scholarly or industry think tank industry think tank sources. sources. Criteria Borrower Risk Rating Scorecard (CLO 1, 2, 5) (SLO 1,4) Weighting: 30% Research Methods: (CLO 1, 2, 5) (SLO 1,4) Information and data sources Weighting: 10% Conclusion (CLO 1, 2,5) (SLO 1,4) Weighting: 5% HD 85%-100% D 75%-85% C 65%-75% P 50%-65% N 0%-50% Presents a logical and original Shows evidence of critical thinking in The analysis could have been further Key aspects not fully Lacks evidence of perspective with evidence of critical application. Discusses the techniques to developed, or misses some key developed. Some development and cohesion of thinking in application. Provides a clear credit analysis using accurate and aspects. Generally discusses the techniques misunderstanding or errors in key aspects. Lacked rationale of the techniques of credit relevant theories and concepts, but the of credit analysis, but the link to theories required calculations. Risk criteria understanding of calculations analysis using accurate and relevant rationale can be strengthened. Risk and concepts, and the rationale can be and descriptors in the borrower required. No consistency theories and concepts, by relating to criteria and descriptors are developed strengthened. Risk criteria and descriptors risk rating scorecard is not between the scorecard and the context in Introduction. Risk consistently with the country/ are developed based on some of the consistent with the country/ the country/ sovereign, criteria and descriptors are developed sovereign, industry, business, country/ sovereign, industry, business, sovereign, industry, business, industry, business, strongly based on the country/ management and financial risk management and financial risk assessments management and financial risk management and financial risk sovereign, industry, business, assessments discussed in the report. discussed in the report. Where applicable, assessments. assessments. management and financial risk Where applicable, all calculations steps majority of calculations steps and the assessments discussed in the report. and the composite borrower risk rating composite borrower risk rating are correct, Where applicable, all calculations of are correct. Rating for each section of with minor errors. Some inconsistency steps and composite borrower risk the scorecard is relevant with the between the rating for each section of the rating are correct. country/ sovereign, industry, business, scorecard and the country/ sovereign, management and financial risk industry, business, management and assessments but clarity can be financial risk assessments. improved. Draws upon relevant, reliable and Draws upon relevant, reliable and Draws upon a range of sources and research Draws upon a limited range of Sources and research methods current evidence from a wide range of current evidence from a wide range of methods, however some may be of sources and research methods, of are not suitable AND/OR of sources and appropriate research sources and appropriate research questionable relevance. Links to the critical some relevance. Links to the limited application. Links to methods. Sources are directly relevant, methods. While sources are directly issue were attempted with varying degrees critical issue were attempted with the critical issue not clearly and links to the critical issue are clearly relevant, some links to the critical issue of success. Identifies the sources, limited success. Attempts to defined. The sources, drawn. In-depth understanding of could have been made clearer. Shows a timeframe, measures and format of data. identify the sources, timeframe, timeframe, measures and appropriate research developing understanding of Data collected are accurate and relevant measures and format of data, but format of data are not methods. Identifies the sources, appropriate research but the details and organisation can be lacks clarity. Data collected are identified. Data is inaccurate timeframe, measures and format of methods. Identifies the sources, improved. accurate and relevant but without and irrelevant. data. Data collected are accurate and timeframe, measures and format of any organisation. relevant with the right level of details data. Data collected are accurate and and organisation. relevant with the right level of details. Presents astute, well-reasoned, and Presents astute, well-reasoned, and Arrives at logical conclusions, summarising Arrives at general conclusions, States ambiguous, illogical or clear conclusions. clear conclusions that can be clearly key issues, but could have improved links to largely summarising important unsupportable conclusions. linked to the preceding discussion. the context identified in the discussion. themes with only limited connectivity to the context identified in the discussion. Criteria Referencing: Weighting: 5% (CLO 6) (SLO 1,4) HD 85%-100% Accurately cites sources in-text and compiles reference list, accurately labels and formats tables and figures, according to APA style. D 75%-85% C 65%-75% P 50%-65% N 0%-50% Cites sources in-text and compiles Cites sources in-text and compiles reference Cites sources in-text and compiles Fails to adequately cite reference list, labels and formats tables list, labels and formats tables and reference list, labels and formats sources in-text and reference and figures, according to APA style, with figures, according to APA style, with few tables and figures, according to list is inaccurate AND/OR next-to-no errors. Exceeds minimum errors. Meets minimum standards for APA style, with some errors. May mislabels or misformats tables standards for number of sources. number of sources. have a limited number of and figures, AND/OR with references, which could have many errors in reference been further developed. format AND/OR insufficient number of references.
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Technical Report


Background Context
8Telecom International Holdings Co. Ltd., which started the operation in 2004, is a highflying SGX Mainboard-listed telecommunication company. Based in Singapore, 8Telecom has its
base and is a market leader in infrastructure solutions for telecommunications across the AsiaPacific region (Murad et al., 2022). The Company has a proven excellence track record of over
two decades, offering the fully-fledged services of designing, building, and maintaining
telecommunication networks. Its customer spectrum ranges from telecommunications operators to
government agencies to corporate organizations seeking the latest technology to meet connectivity
Nature of Business: Telecommunications Infrastructure Solutions Provider
8Telecom is experienced in integrating services for telecom infrastructure development,
addressing different needs either in urban or rural areas. Virtual operations services include
network planning, installation, and maintenance, which cover transmission of voice, data, and
multimedia traffic flows without faults. On the other hand, 8Telecom offers a variety of
telecommunications equipment and technologies that cover the ever-expanding requirements of
customers. In the telecommunications sector,8Telecom delivers on innovation and customer
satisfaction, setting the trends and bringing people closer.
Purpose of the Report
This report explores an extensive exam to identify the credit risk of funding a particular
project of 8Telecom. A company's financial stability can be thoroughly established, and the
viability of the Project can be reasonably determined, which facilitates the decision-making
process for shareholders regarding investment and funding. This evaluation specifies the projected

financial risks and revenue sources so the Company can manage risks productively and reap the
best profit. This analysis will allow all interested parties to understand the 8Telecom
#creditworthiness and the #feasibility of the Project.
Structure of the Report
The report will comprise the background, the business the Company is engaged in, and the
sponsored Project. However, it emphasizes the necessity of underwriting debt using credit risk
assessment tools for project financing and its effect on investors, lenders, and company bosses.
The report will provide the time for conducting the assessment and disclose the methodology/tools
used to evaluate credit risk appropriately.
Description of 8Telecom Intl Holdings Co Ltd
Overview of its Business Operations in the Telecommunications Industry
9 Telecom provides general and specific needs that help its customers make their business
and personal communications quicker and simpler. Its core business activities, therefore, are
primarily related to developing, building, and maintaining telecommunication networks. At the
core of its operations lies telecommunications networks' design, construction, and maintenance
(Aduba & OBondy, 2021). The Company has a staff of highly qualified professionals, and its
cutting-edge technological infrastructure allows it to offer solutions to customers such as telecom
operators, central and local governments, and corporations that are both accurate and timely.
In addition to the deployment network, the service models of 8Telecom are comprised of
different types that amplify connection and facilitate operations. The services such as network
planning and optimization, spectrum management, tower infrastructure deployment, and the




telecommunications operator (Lu, 2022)







8Telecom remains loyal to sustainability and corporate social responsibility, integrating
eco-friendly processes into the Company's operations and supporting projects that address digital
divide issues. In partnership with other network and telecommunications companies, the Company
drives change and innovates better infrastructures globally (Lian et al., 2021). Finally, with this
strength in mind, 8Telecom Intl Holdings Co Ltd strives as a role model in the telecommunications
domain by utilizing experiences, technology, and commitment to offer high-end solutions that
meet the connectivity requirement and enable progress and the digital age.
Project Description
Scope and Objectives of the Project
By deploying an 8Telecom Intl Holdings Co Ltd fiber optic system, its CO aims to deliver
high-speed internet services and support the growing trend. The centered program involves
installing high-tech fiber optic cables and the required infrastructure and staff to increase the
Company's network footprint (Aduba & OBondy, 2021). The campaign's primary goal is to expand
8Telecom's telecommunications services, thus creating a digital divide solution for underserved
and remote areas where users don't have internet access and socio-economic development is
On top of expanding the network's coverage area, the Project makes it possible to switch
the obsolete infrastructure to provide Internet broadband to all users and bring forth new
technologies like 5G, IoT, and cloud. To impart superior data transmission speed, low latency, and
high bandwidth capacity, 8Telecom aims to render spectrum-quality services to its customers using
fiber optic technology (Yu et al., 2021).
Importance and Relevance to 8Telecom's Strategic Goals

Building an optic fiber network organization is an incredibly aspirant and permanent
undertaking of 8Telecom. It is a long-term and sustainable development and growth. Latest
connectivity is a determining factor in development processes that entails a digital revolution that
generates convenient asset management and thus makes both businesses and societies manageable
(Lan, 2023). The significant investment in upgrading the fiber optic network is evidence of the
Company's commitment to giving reliable, performance-oriented telecommunication services that
meet the always-changing needs of its customers.
In addition, the launch of the Project serves as one of the top priorities for 8Telecom, as it
allows for expanding a market footprint and further competitiveness in telecommunications. The
objective is to broaden the 8Telecom network offerings, satisfy advanced telecommunications
needs, capture new market chances, acquire more clients, and constitute the Company as a
sustainable revenue generator (Lu, 2022).
Financial Performance and Financial Strength Assessment
Profitability Ratios: Profitability shares show how 8Telecom's ability to convert this
revenue into profit compares with its assets. These indicators include the gross profit margin,
which refers to the proportion of revenue kept after the assumption of the cost of goods sold, which
shows the extent of cost ability and price control (Lian et al., 2021). Conversely, the net profit
margin shows the net income ratio to total revenue, emphasizing cost control and operative
Asset Utilization and Efficiency Ratios: It is vital to assess how effectively 8Telecom
generates revenue from its assets. The asset turnover ratio, for instance, reveals the efficiency with
which the Company utilizes its assets to generate revenue (Aduba & OBondy, 2021). A higher
overall asset turnover ratio indicates better asset utilization and management skills. Also, the

turnover of inventory ratio reflects the steadiness of inventory changes, giving a clue about the
efficiency of inventory management and sales functions.
Debt and Solvency Ratios: Assessing the degree to which 8Telecom makes enough
revenue from its assets is one of the core rates. An example of an asset turnover ratio is where it is
evident how well the Company uses its assets to spur revenues. An increased ratio of assets to
turns implies skillful, relevant asset use and efficient resource utilization (Lu, 2022Moreover, the
inventory turnover ratio is a ratio used to determine how often inventory is replaced as another
suggestion of good management and sales.
Liquidity Ratios: Reliablely perform the payment history and control debts correctly. The
debt-to-equity ratio is also a good indicator of debt level in a business, as businesses with low debtto-equity ratios can segment their funding sources. Total debt and equity supplied by the
shareholders help assess financial risk and establish solvency. On the other hand, the attention
coverage ratio assesses the firm's ability to insure its interest expenses with earnings before interest
and taxes (EBIT) (Ngurah & Panii, 2021).
Assessment of the Project: Investment Appraisal
8Telecom Int Ltd, to evaluate the investment profitability and viability, uses net present
value (NPV), internal rate of return (IRR), and payback period. The following tools are cast:
Net Present Value (NPV): NPV is essential since it helps discount future cash flows to
their present value and eases investment profitability analysis. In this regard, net present value
(NPV) becomes a vital tool used in determining the return on investment of the expanded fiber
optic network infrastructure by comparing it to the original investment outlay ((Lan, 2023). If the
NPV is positive, it anticipates that the Project will produce revenues higher than the return on
capital, while it is positive because it is financially viable.

Internal Rate of Return (IRR): IRR is the discount rate at which the current value of
future cash inflows (cash in Hinceforth) equilibria with the initial investment (cash out
Hinceforth), giving the net present worth of zero. Output: This allows 8Telecom to conduct a cash
flow analysis of the Project, which will enable the determination of the Project's attractiveness and
profitability (Ngurah & Panii, 2021). IRR is the reason investors go for projects with the highest
IRR since the...

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