When Evaluating Credit,a Customer Who Has Paid All Bills on Time

question 78

Multiple Choice

When evaluating credit,a customer who has paid all bills on time and has favorable credit references from other creditors is said to have

• A)collateral.
• B)capacity.
• C)creditworthiness.
• D)character.

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Definitions:

Stockholders' Equity

The ownership interest of shareholders in a corporation, calculated as total assets minus total liabilities.

Debt-To-Equity Ratio

A ratio that demonstrates the mix of shareholder equity versus debt financing employed to fund a company's assets.

Long-Term Liabilities

Financial obligations of a company that are due beyond one year, including bonds payable, long-term loans, and lease obligations.

Working Capital

The difference between current assets and current liabilities, indicating the short-term financial health of a business.