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Assume You Are a Credit Manager in Charge of Approving

question 37

Essay

Assume you are a credit manager in charge of approving commercial loans to business firms.Identify three aspects of a firm's cash flows you would review and explain the type of information you hope to gain from reviewing each of those five aspects.


Definitions:

Capacity

The maximum output or producing ability of a facility, machine, business, or system under normal working conditions.

Collateral

An asset that a borrower offers to a lender as security for a loan. If the borrower fails to repay, the lender may seize the collateral to recoup losses.

Choice

The act of selecting between two or more possibilities or the freedom to pick an option among several.

Capacity

The maximum amount that something can contain or produce; in a business context, it often refers to the maximum output or production ability.

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