Evaluation of initial working capital and investment loan demands: An application in the manufacturing industry

Companies invest for reasons such as constantly improving and developing themselves, adapting to technology, gaining competitive advantage by developing new products. Due to the aforementioned reasons, it is important for businesses to make an effective investment decision. In the financing of the investment can be sources equities, funds generated from activities, bank loans and additional capital increase. When businesses prefer to use bank loans instead of internal resources in financing the investment, financial institutions are involved in the process. The first criterion when evaluating the investment loan requests of banks is that there is no problem in loan repayments. The investment loan request of a company that will operate in the relevant manufacturing industry has been evaluated and it has been revealed that it will not have any problems in loan repayments with the debt solvency method. The occurrence of unforeseen situations during the projected period causes deviations in the solvency of debt. For example; it is an investment to be made by the enterprises in the future, the use of equity or credit in financing this investment, the continuous use of rotary loans for working capital needs, the possibility of maintenance investments for the machines of the enterprises by years, etc. situations can be shown. For this reason, if these situations are likely to exist in the projected period, these events should definitely be reflected in the cash flows.