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If you are preparing Financial Projections for an Industrial Loan from a Bank and if the Projected DSCR is very high, what problem will it pose?

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Question added by Shamik Sinha , SENIOR MANAGER AUDIT , M/S MADHUSUDHANA REDDY & CO, Chartered Accountants
Date Posted: 2016/07/29
Mahesh Singhal
by Mahesh Singhal , Consultant , Synergy Consulting

You need to justify why the loan repayments may not be accelerated.

Muhammad Rauf
by Muhammad Rauf , FINANCE MANAGER , ABDULLA FOUAD CONTRACTING CO.

Higher projected DSCR will not pose any problems unless future NOI prospects are reasonably ok and long term debts maturity and related payments (Principle + Interest) stay below the NOI. Industrial concern equity section should be checked to assess the dividend policy.

Tasneem Presswala
by Tasneem Presswala , Financial Analyst (Actively Looking for good opportunity) , Al Hasawi refrigerator and water cooler co.

It may raise a questions about your projections. It may shows that your sales projections are very high and inappropriate. If you are taking industrial loan then your initial expenses will be high as compare to initial sales. 

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