【答案解析】The potential bad loans can be identified from the following warning signals: Poor management: —Poor management of the business and its limited ability to cope with the changing environment is the basic cause of business failure. —Indications of potential business failure involving poor management: -insufficient managerial personnel at various levels of operations; -disharmony within the management team; -chaos caused by major re-organization or relocation; -over-ambitious expansion of operations; -lack of financial or operating controls. Industrial/market conditions: —Market conditions, such as keen competition among producers, declining market demand and change in the preference of consumers, may lead to business failure: —Aspects should be paid attention to: -adverse performance of the company compared to its competitors; -advanced technology which is expensive to keep up with; -change in consumers' preferences, tastes or fashion; -threat caused by new entrants to the market and deteriorating market shares; -monopoly power created by mergers or acquisitions. Economic and political conditions: —The economic and political conditions will largely influence the business. —Unfavorable situations of a business may be subject to: -economic slow-down or recession; -deteriorating political stability; -adverse conditions due to social unrest and pressure groups' campaigns. The implications of a client's bank account —Basically show the background and financial statistics which serve as a primary source for detecting possible problems in a client's financial position. —Indicators: -static or hard-core overdraft; -growing numbers of cheques with "insufficient funds" claimed by the client's customers; -excessive number of post-dated cheques; -frequent drawings against uncleared funds; -frequent excesses over agreed credit limit; -deficiencies in loan repayments; -past due import bills; -unusual increase in credit enquiries concerning the client's account from other banks and financial institutions; -frequent cheque "kiting". Financial position —Financial statements will reflect the deterioration of the company's financial position. —Any deviation from the norm or market average would be a good indicator reflecting a business financial position. —Indicators: -liquidity ratios; -debt ratios; -profitability ratios; -coverage ratios; -trends over time; -cash-flow; -flows of other funds and forecast figures.