You Are a Banker Reviewing a Loan Application from a Local

question 112

Multiple Choice

You are a banker reviewing a loan application from a local business.Which of the following ratios would you look at to get a quick measure of the business's ability to meet its long-term financial obligations?

• A) Liquidity ratio
• B) Return on assets
• C) Debt ratio
• D) Current ratio
• E) Activity ratio

---

Definitions:

Factor Analysis

A statistical method used to describe variability among observed, correlated variables in terms of potentially lower number of unobserved variables, called factors.

Logical-mathematical

Relating to logical thinking and an understanding of mathematical concepts and relationships.

Linguistic

Pertaining to language, including its structure, use, and the study of its properties and function.

Spatial

Relating to, occupying, or having the character of space, often used in context with one's ability to judge size, distance, or the relationship between objects in space.