Lenders Use ____ Ratios When Setting Limits on How Much

question 73

Multiple Choice

Lenders use ____ ratios when setting limits on how much a home buyer can borrow.

• A)front-end and back-end
• B)only front-end
• C)assets-to-debt
• D)equity-to-liability

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Definitions:

Unit Product Cost

The total cost (direct materials, direct labor, and manufacturing overhead) divided by the number of units produced, representing the cost per individual unit.

Direct Labor Cost

Wages that are paid to workers who are directly involved in the production of goods or services.

Absorption Costing

An accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed overhead—in the cost of a product.

Net Operating Income

A measure of a company's profitability from its core business operations, excluding taxes and interest expenses.