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Traverse Bank
Lipson, Marc L. Case F-1929 / Published December 4, 2019 / 7 pages.
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Product Overview

This case follows a senior loan officer who is reviewing requests from two customers of the bank to raise their credit limits. The two businesses are alike in many ways, but the loan officer believes one represents a greater problem. The students must use a ratio and financial analysis (all ratios are provided, as the challenge is not calculating ratios but interpreting them) to identify which of the two is worthy of concern. The emphasis in this case is on interpretation rather than calculation, though an instructor can explore definitions and calculations as desired. By hinting that there is a conclusion that can be reached, students are motivated to view their analyses as supporting a judgement. Just as ratios essentially link line items to provide insight, judgement links ratios to tell a story. An intentional feature of this case is that the judgement is relatively clear, and students will finish with a sense of success.


Learning Objectives

The case can be used to pursue the following objectives: •To familiarize students with basic financial ratios and their definitions, including an introduction to the DuPont framework •To provide a context for applying ratios to evaluate financial health, and to develop an understanding that financial health is an evaluation regarding the future ability to make required payments •To see how ratio analysis is used along with other financial and nonfinancial data to inform a judgement about financial health •To introduce the concepts of a line of credit and drivers of short-term financing needs •To demonstrate the importance of assessing managerial ability in an evaluation of financial health

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  • Overview

    This case follows a senior loan officer who is reviewing requests from two customers of the bank to raise their credit limits. The two businesses are alike in many ways, but the loan officer believes one represents a greater problem. The students must use a ratio and financial analysis (all ratios are provided, as the challenge is not calculating ratios but interpreting them) to identify which of the two is worthy of concern. The emphasis in this case is on interpretation rather than calculation, though an instructor can explore definitions and calculations as desired. By hinting that there is a conclusion that can be reached, students are motivated to view their analyses as supporting a judgement. Just as ratios essentially link line items to provide insight, judgement links ratios to tell a story. An intentional feature of this case is that the judgement is relatively clear, and students will finish with a sense of success.

  • Learning Objectives

    Learning Objectives

    The case can be used to pursue the following objectives: •To familiarize students with basic financial ratios and their definitions, including an introduction to the DuPont framework •To provide a context for applying ratios to evaluate financial health, and to develop an understanding that financial health is an evaluation regarding the future ability to make required payments •To see how ratio analysis is used along with other financial and nonfinancial data to inform a judgement about financial health •To introduce the concepts of a line of credit and drivers of short-term financing needs •To demonstrate the importance of assessing managerial ability in an evaluation of financial health