Abstract
M.Com. (Business Management)
In the past few years the South African cement industry was controlled by a
cement cartel. The cartel is a production agreement between the following
companies: Anglo Alpha Limited, Blue Circle Limited and Pretoria Portland
Cement Company Limited. The Government has advised, due to the
discouragement of competition resulting from the determination of market prices
by the cartel, that the cartel be disbanded as from 31 December 1995.
Companies within the cement industry applying for credit facilities, need to be
evaluated and their credit risk analysed before they can be granted with credit.
The financial information that the company provides is not adequate enough to
assess the creditworthiness of the company. Other factors affecting the cement
industry should also be identified to help with the evaluation. This need
together with the disbandment of the cartel emphasises the fact that risk areas
should now be identified that can later be used to evaluate the company's
creditworthiness. Therefore a model for credit evaluation is developed.