Question: What is contractor’s financial resources?
1. Obtain a full financial,personal and business. See that it is dated.
2. Verify statement with the bank, see if the average bank balance
over a period of six months or a year approximates that shown
in the statement. If it varies greatly, why?
3. Stocks and bonds should be listed and described specifically, so
their value can be ascertained from market quotations.
(a) Any unlistedsecurities should be given special treatment, so
that the underwriter will be able to give them full value in
estimating the contractor’s true net worth.
(b)If any security is pledge as collateral, this fact must be noted
in the underwriting memorandum accompanying the
statement.
4. List each account receivable seperately. The name of the debtor
should be given and the date when it is due or in the event it is
overdue, the date it is expected to be paid. Any receivable that is
withheld until completion of work, or during a maintenance
period, should be noted, giving the dates that the money’s are to
be released to the contractor.
5.The inventory should be divided into two classes:
(a) That part of the inventory that can be used in the contract
under consideration. This is a quick asset.
(b) All other material that does not have a ready market should be considered as a fixed ( or slow ) asset