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Home / Questions / When considering making a loan to a company, a bank will look for: A) a high debt ratio a

When considering making a loan to a company, a bank will look for: A) a high debt ratio a

When considering making a loan to a company, a bank will look for:

A) a high debt ratio and a low current ratio

B) a high debt ratio and a high current ratio

C) a low debt ratio and a low current ratio

D) a low debt ratio and a high current ratio

12) Current assets are assets that the business plans to sell, consume, or convert to cash within 12 months or less.

13) Current assets are typically more liquid than long-term assets and therefore harder to convert into cash.

14) Long term assets are those debts payable in longer than 1 year or the entity's operating cycle which ever is longer.

15) The term liquidity refers to long term items such as a building.

16) From a traditional analysis stand point a current ratio of 2.00 is considered ideal.

17) The debt ratio is calculated as follows:  total assets divided by total liabilities.

18) The current ratio is calculated as follows:  current liabilities divided by current assets.

19) A multi-step income statement typically includes the calculation of gross profit.

20) A low debt ratio is preferable to a high debt ratio, whereas a high current ratio is preferable to a low current ratio.

Dec 07 2019 View more View Less

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