Northstar Aerospace

The account manager at a national bank is reviewing the file of a client - Northstar Aerospace - that wants to renew and increase its line of credit and term loan. Northstar Aerospace is a public conglomerate that had operations in four areas: semiconductors, pumps, aerospace and industrial technology. After a number of years with moderate success, the company reduced its diversity and focused on the aerospace industry. Most of the company's revenue comes from military contracts; however, due to the manufacturing cycle the company was experiencing a backlog of orders worth $260 million. The account manager must size up the business and project the balance sheet and income statement for the upcoming year to decide whether or not to approve the line of credit and if so, what the terms should be.