Considering the 5 C's of Credit, What Does Character Signify

question 113

Multiple Choice

Considering the 5 C's of credit, what does character signify?

• A) The customer's willingness to meet credit obligations.
• B) The customer's ability to meet credit obligations out of operating cash flows.
• C) The customer's financial reserves.
• D) A pledged asset in the case of default.
• E) General economic conditions in the customer's line of business.

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Definitions:

Warranty Expense

Costs incurred by a company for repairing, replacing, or refunding products under warranty, considered a contingent liability until incurred.

Unrealized Loss

A loss that results from holding onto an asset that has decreased in price, but has not yet been sold.

Tax Rate

The rate at which the government imposes taxes on the income or earnings of a person or a company.

Deferred Tax Asset

Represents future tax relief for a company, arising from deductible temporary differences, carryforward losses, or credits.