A Banker Is Analyzing a Company Which Operates in the Petroleum

question 154

Multiple Choice

A banker is analyzing a company which operates in the petroleum industry.Which of the following might be a major consideration in determining whether the company should receive a loan?

• A) The petroleum industry suffers from political pressures concerning the selling price of its products.
• B) Inflation has been high for several years in a row.
• C) All companies in the petroleum industry use the same accounting principles.
• D) The company has a large amount of interest payments related to many outstanding loans.

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Definitions:

Illegal Activities

Actions that are forbidden by law, including, but not limited to, theft, fraud, drug trafficking, and illegal gambling.

Computer Networks

A collection of interconnected computing devices that can exchange data and share resources among each other over a set of communication protocols.

CPA Firm

A company that provides accounting services to the public, including auditing, tax preparation, and advisory services, staffed by certified public accountants.

Internal Business Audit

An internal business audit is a comprehensive examination of a company’s internal controls, processes, systems, and governance, aiming to assess operational efficiency, identify areas for improvement, and enhance risk management.