When Trying to Assess the Credit Standing of a Customer

question 29

Multiple Choice

When trying to assess the credit standing of a customer, a financial analyst could use which of the following sources?

• A) credit ratings and reports from credit agencies
• B) ratio calculations
• C) financial statements of the credit applicant
• D) all of the above

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Definitions:

Regressive Tax

At the individual level, a tax whose average tax rate decreases as the taxpayer’s income increases. At the national level, a tax for which the average tax rate (= tax revenue/GDP) falls as GDP rises.

Income Tax Base

The total amount of income on which an individual or entity is required to pay income tax.

Sales Tax

A tax levied on the cost (at retail) of a broad group of products.

Federal Income Tax

The tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities.