DATA ANALYTICS F/ACCT (LL) W/CONNECT
1st Edition
ISBN: 9781260931884
Author: RICHARDSON
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 1, Problem 7P
Consider the 2013 declined loan data from LendingClub titled “RejectStatsB2013.” Similar to the analysis done in the chapter, let’s scrub the employment length. Because our analysis requires risk scores, debt-to-income data, and employment length, we need to make sure each of them has valid data.
- a. Sort the file based on employment length and remove those observations (the complete row or record) that have a missing score (“NA”) or a score of zero.
- b. Sort the file based on debt-to-income and remove those observations (the complete row or record) that have a missing score, a score of zero, or a negative score.
- c. Sort the file based on risk score and remove those observations (the complete row or record) that have a missing score or a score of zero.
- d. There should now be 669,993 observations. Any thoughts on what biases are imposed when we remove observations? Is there another way to do this?
- e. Run a PivotTable analysis to show the number of Excellent Risk Scores but High DTI Bucket loans in each Employment year bucket. Any interpretation of why these loans were declined based on employment length?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Please help with the below minicase.
Directions:
The best way to do this case is to use relevant credit information and calculate some financial ratios: ROA, debt ratio, liquidity ratios, ROE, profit margin, Inventory and Asset turnover. Then look at breakeven point probability, and finally the possibility of a repeat order.
What can you say about Miami Spice’s creditworthiness? What is the break-even probability of default? How is it affected by the delay before MS pays its bills? How should George Stamper’s decision be affected by the possibility of repeat orders?
MiniCase:
George Stamper a credit analyst with Micro-Encapsulators Corp. (MEC) needs to respond to an urgent email request from the southeast sales office. The local sales manager reported that she had an opportunity to clinch an order from Miami Spice (MS) for 50 encapulators at $10,000 each She added that she was particularly keen to secure this order since MS was likely to have a continuing need for 50 encapulators a…
Please help with the below minicase.
Directions:
The best way to do this case is to use relevant credit information and calculate some financial ratios: ROA, debt ratio, liquidity ratios, ROE, profit margin, Inventory and Asset turnover. Then look at breakeven point probability, and finally the possibility of a repeat order.
What can you say about Miami Spice’s creditworthiness? What is the break-even probability of default? How is it affected by the delay before MS pays its bills? How should George Stamper’s decision be affected by the possibility of repeat orders?
MiniCase:
George Stamper a credit analyst with Micro-Encapsulators Corp. (MEC) needs to respond to an urgent email request from the southeast sales office. The local sales manager reported that she had an opportunity to clinch an order from Miami Spice (MS) for 50 encapulators at $10,000 each She added that she was particularly keen to secure this order since MS was likely to have a continuing need for 50 encapulators a…
Based on the Cardinal Credit Financial Statement below, write a bulleted list analysis that includes:
a) Do you think the main changes from year to year are good or bad and why do you think so?
Chapter 1 Solutions
DATA ANALYTICS F/ACCT (LL) W/CONNECT
Ch. 1 - Prob. 1MCQCh. 1 - Prob. 2MCQCh. 1 - Prob. 3MCQCh. 1 - Prob. 4MCQCh. 1 - Prob. 5MCQCh. 1 - Prob. 6MCQCh. 1 - Prob. 7MCQCh. 1 - Prob. 8MCQCh. 1 - Prob. 9MCQCh. 1 - Prob. 10MCQ
Ch. 1 - Prob. 1DQCh. 1 - Give an example of how Data Analytics creates...Ch. 1 - Prob. 3DQCh. 1 - Prob. 4DQCh. 1 - Prob. 5DQCh. 1 - Prob. 6DQCh. 1 - Prob. 7DQCh. 1 - Prob. 8DQCh. 1 - Prob. 9DQCh. 1 - Prob. 10DQCh. 1 - Prob. 11DQCh. 1 - Prob. 12DQCh. 1 - To address the question Will I receive a loan from...Ch. 1 - Download and consider the data dictionary file...Ch. 1 - Download and consider the rejected loans dataset...Ch. 1 - Prob. 3PCh. 1 - Prob. 4PCh. 1 - Consider the 2013 declined loan data from...Ch. 1 - Consider the 2013 declined loan data from...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A lending officer at C Bank has insisted that your firm improve the current ratio of 0.8 before the bank will consider a loan. Which of the following actions would INCREASE the ratio? Group of answer choices: Selling some of the existing inventory at cost Using cash to pay off current liabilities Borrowing long-term debt to pay off short-term bank loan Paying off long-term debt. Collecting some of the current accounts receivablearrow_forwardDefine the following terms and explain why they were important during the housing and credit crisis of 2007-2009 a.Securitization b. Subprime loan c. Asset write-downarrow_forwardDo you think that IFRS 9 may make loans more expensive for borrowers? Implementation of IFRS 9 will influence borrower make less loan? Is there any needs of improvement with the relationship between borrowers and financial companies?arrow_forward
- Which of the following is TRUE about Credit Score / FICO Score: Group of answer choices the lower the number, the better chances to obtain credit at a very low cost randomly assigned number; Experian, Equifax, and TransUnion use to monitor Covid-19 tracing typically between 1 and 10; calculated from the highest value assigned by the government typically between 300 and 850; calculated from your credit report to gauge your reliability as a borrowerarrow_forwardWhen firms enter into loan agreements with their bank, it is very common for the agreement to have a restriction on the minimum current ratio the firm has to maintain. So, it is important that the firm be aware of the effects of their decisions on the current ratio. Consider the situation of Advanced Autoparts (AAP) in 2009. The firm has total current assets of $1,780,195,300 and current liabilities of $1,369,381,000. What is the firm’s current ratio? If the firm were to expand its investment in inventory and finance the expansion by increasing accounts payable, how much could it increase its inventory without reducing the current ratio below 1.2? If the company needed to raise its current ratio to 1.5 by reducing its investment in current assets and simultaneously reducing accounts payable and short-term debt, how much would it have to reduce current assets to accomplish this goal?arrow_forwardI submitted this question before but the wrong values were inputted for the solution given. Remember to put 244000 for the loan value in excel.arrow_forward
- You are developing a new product and you use a 12% discount rate to compute its NPV. Your banker, from whom you hope to obtain a loan, expresses concern that your discount rate is too low. How do you respond?arrow_forwardWhen firms enter into loan agreements with their bank, it is very common for the agreement to have a restriction on the minimum current ratio the firm has to maintain. So, it is important that the firm be aware of the effects of their decisions on the current ratio. Consider the situation of Advanced Autoparts (AAP) in 2009. The firm had total current assets of $1,907,570,000 and current liabilities of $1,362,550,000. a. What is the firm's current ratio? b. If the firm were to expand its investment in inventory and finance the expansion by increasing accounts payable, how much could it increase its inventory without reducing the current ratio below 1.2? c. If the company needed to raise its current ratio to 1.5 by reducing its investment in current assets and simultaneously reducing accounts payable and short-term debt, how much would it have to reduce current assets to accomplish this goal? Question content area bottom Part 1 a. What is the firm's…arrow_forwardShimmer Products is considering which bad debt estimation method works best for its company. It is deciding between the income statement method, balance sheet method of receivables, and balance sheet aging of receivables method. If it uses the income statement method, bad debt would be estimated at 5.6% of credit sales. If it were to use the balance sheet method, it would estimate bad debt at 13.7% percent of accounts receivable. If it were to use the balance sheet aging of receivables method, it would split its receivables into three categories: 0–30 days past due at 5%, 31–90 days past due at 21%, and over 90 days past due at 30%. There is currently a zero balance, transferred from the prior years Allowance for Doubtful Accounts. The following information is available from the year-end income statement and balance sheet. There is also additional information regarding the distribution of accounts receivable by age. Prepare the year-end adjusting entry for bad debt, using A. Income statement method B. Balance sheet method of receivables C. Balance sheet aging of receivables method D. Which method should the company choose, and why?arrow_forward
- Car title lenders are considered to be predatory lenders, since they charge high rates of interest to those individuals whocan least afford it. Various laws in recent years have attempted to curb the high interest ratesand these practices. Car title lenders still operate and some would argue that they fill a need insociety. Individuals using car title lender services typically are poor and have no other way toborrow funds. An LA Times report in 2015 stated that about 1 out of 9 car title loans end in theborrower’s car being repossessed.An NBC report found that the average car title loan is $950, and borrowers take an average of10 months to repay the loan. Typically, consumers can borrow up to 26% of the value of theircars and the lender charges 25% per month. This interest rate means a consumer borrowing$950 would pay about $238 per month in interest, or $2,375 over the 10-month period that the$950 was borrowed.One consumer lender is LoanMax, which loans cash in exchange for a car…arrow_forwardSuppose a company’s current credit terms are 1/10,net 30, but management is considering changingits terms to 2/10, net 40, relaxing its credit standards, and putting less pressure on slow-payingcustomers. How would you expect these changesto affect (a) sales, (b) the percentage of customerswho take discounts, (c) the percentage of customers who pay late, and (d) the percentage of customers who end up as bad debts?arrow_forwardIf the cost of debt went up to 11 percent and all other factors remained equal, what would be the indifference point for EBIT? Break-even level $___?If the cost of debt went up to 11 percent and all other factors remained equal, what would be the indifference point for EBIT? Break-even level $___? Note:- • Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. • Answer completely. • You will get up vote for sure.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
What is Risk Management? | Risk Management process; Author: Educationleaves;https://www.youtube.com/watch?v=IP-E75FGFkU;License: Standard youtube license