The meeting was important for the students, 10 finance majors working for their MBAs.
They were competing for four places on the Rutgers team in a competition sponsored by the New York Society of Security Analysts to determine which school could develop the best analytical offering. We faculty advisers had to decide who would represent Rutgers in an oral defense of a written analysis before the professional judges.
Each student had prepared a report on the company selected: the Cosi restaurant chain, which has a number of locations in the New York-New Jersey area.
The students had done their homework. Each presented a report stressing numbers galore. Since each had a strong quantitative background (one had a PhD in physics, too), all their reports were creditable.
And, as you might expect, some had concluded by suggesting a short on the stock and some a strong "buy."
One by one the students presented their numbers and justification for being on the team. Then I asked: "Have you ever been in a Cosi restaurant?"
Five gulped and said it had never occurred to them. Four said they had only thought about it. Just one had gone to a Cosi.
Guess who was our top choice for the team.
Physical contact and observation is a solid plus in any type of evaluation. Visiting a potential borrower can be important in sizing up conditions, the fourth of the four C's of credit.
One lender told me: "I go into the warehouse or storerooms and simply brush my hand across the boxes stored there. A film of dust tells me more than all their numbers about the speed of inventory turnover."
Another lending officer said that his method for measuring the effectiveness of management and the way the operation is run is to inspect the bathrooms. If a store, a garage, or some other facility has untidy bathrooms for employees, I feel that this is indicative of the sloppiness of the rest of the operation too."
Visiting your customers is also a good way to keep them happy.
Mike Maher, who owned Maher Terminals, the gigantic container terminal at Port Newark, once gave me a tour. He had built the operation from one jeep into a major facility with about a dozen ship loading cranes and employing hundreds of people. His pride in it was obvious.
So was his dissatisfaction with his major bank, with which he did millions of dollars of business. Though only five miles away, the bank had never sent anyone down to Port Newark to take the type of tour that Mike gave me.
That aloofness cost the bank information too.
While Mike was showing me around, a worker came up to him and said, "Mike, our bathroom needs painting. It is depressing."
Mike took out a pad and made a note of the complaint. You can bet the painting got done.
Mr. Nadler, an American Banker contributing editor, is a professor emeritus of finance at Rutgers University Graduate School of Management in Newark, N.J.Comment: Add Shoe Leather to That Loan AnalysisThe meeting was important for the students, 10 finance majors working for their MBAs.
They were competing for four places on the Rutgers team in a competition sponsored by the New York Society of Security Analysts to determine which school could develop the best analytical offering. We faculty advisers had to decide who would represent Rutgers in an oral defense of a written analysis before the professional judges.
Each student had prepared a report on the company selected: the Cosi restaurant chain, which has a number of locations in the New York-New Jersey area.
The students had done their homework. Each presented a report stressing numbers galore. Since each had a strong quantitative background (one had a PhD in physics, too), all their reports were creditable.
And, as you might expect, some had concluded by suggesting a short on the stock and some a strong "buy."
One by one the students presented their numbers and justification for being on the team. Then I asked: "Have you ever been in a Cosi restaurant?"
Five gulped and said it had never occurred to them. Four said they had only thought about it. Just one had gone to a Cosi.
Guess who was our top choice for the team.
Physical contact and observation is a solid plus in any type of evaluation. Visiting a potential borrower can be important in sizing up conditions, the fourth of the four C's of credit.
One lender told me: "I go into the warehouse or storerooms and simply brush my hand across the boxes stored there. A film of dust tells me more than all their numbers about the speed of inventory turnover."
Another lending officer said that his method for measuring the effectiveness of management and the way the operation is run is to inspect the bathrooms. If a store, a garage, or some other facility has untidy bathrooms for employees, I feel that this is indicative of the sloppiness of the rest of the operation too."
Visiting your customers is also a good way to keep them happy.
Mike Maher, who owned Maher Terminals, the gigantic container terminal at Port Newark, once gave me a tour. He had built the operation from one jeep into a major facility with about a dozen ship loading cranes and employing hundreds of people. His pride in it was obvious.
So was his dissatisfaction with his major bank, with which he did millions of dollars of business. Though only five miles away, the bank had never sent anyone down to Port Newark to take the type of tour that Mike gave me.
That aloofness cost the bank information too.
While Mike was showing me around, a worker came up to him and said, "Mike, our bathroom needs painting. It is depressing."
Mike took out a pad and made a note of the complaint. You can bet the painting got done.
Mr. Nadler, an American Banker contributing editor, is a professor emeritus of finance at Rutgers Comment: Add Shoe Leather to That Loan AnalysisThe meeting was important for the students, 10 finance majors working for their MBAs.
They were competing for four places on the Rutgers team in a competition sponsored by the New York Society of Security Analysts to determine which school could develop the best analytical offering. We faculty advisers had to decide who would represent Rutgers in an oral defense of a written analysis before the professional judges.
Each student had prepared a report on the company selected: the Cosi restaurant chain, which has a number of locations in the New York-New Jersey area.
The students had done their homework. Each presented a report stressing numbers galore. Since each had a strong quantitative background (one had a PhD in physics, too), all their reports were creditable.
And, as you might expect, some had concluded by suggesting a short on the stock and some a strong "buy."
One by one the students presented their numbers and justification for being on the team. Then I asked: "Have you ever been in a Cosi restaurant?"
Five gulped and said it had never occurred to them. Four said they had only thought about it. Just one had gone to a Cosi.
Guess who was our top choice for the team.
Physical contact and observation is a solid plus in any type of evaluation. Visiting a potential borrower can be important in sizing up conditions, the fourth of the four C's of credit.
One lender told me: "I go into the warehouse or storerooms and simply brush my hand across the boxes stored there. A film of dust tells me more than all their numbers about the speed of inventory turnover."
Another lending officer said that his method for measuring the effectiveness of management and the way the operation is run is to inspect the bathrooms. If a store, a garage, or some other facility has untidy bathrooms for employees, I feel that this is indicative of the sloppiness of the rest of the operation too."
Visiting your customers is also a good way to keep them happy.
Mike Maher, who owned Maher Terminals, the gigantic container terminal at Port Newark, once gave me a tour. He had built the operation from one jeep into a major facility with about a dozen ship loading cranes and employing hundreds of people. His pride in it was obvious.
So was his dissatisfaction with his major bank, with which he did millions of dollars of business. Though only five miles away, the bank had never sent anyone down to Port Newark to take the type of tour that Mike gave me.
That aloofness cost the bank information too.
While Mike was showing me around, a worker came up to him and said, "Mike, our bathroom needs painting. It is depressing."
Mike took out a pad and made a note of the complaint. You can bet the painting got done.
