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:

Certified

Official recognition or guarantee that an individual, organization, product, or document meets certain predefined standards.

Primarily Liable

Refers to the party who has the main responsibility to fulfill an obligation or debt in a legal agreement.

Secondarily Liable

Refers to the responsibility that falls on a party only after the primarily liable party has failed to fulfill their obligations.

Accommodation Maker

An individual who signs a loan document as a guarantor without receiving any of the loan proceeds, promising to pay the debt if the principal borrower fails to do so.