When bankers look for evidence of whether a business will be able to repay a loan, they usually base their assessment of this on
A) what the firm has done in the past.
B) what the owner says the firm will do in the future.
C) the opinion of investment analysts.
D) the business plan of the enterprise.

Question

Quizplus · Accepted Answer

Bankers typically base their assessment of a business's ability to repay a loan on its past performance, including financial statements such as income statements and balance sheets. This allows them to determine the company's financial health and whether it has a history of paying debts on time. The business plan and owner's projections may also be taken into consideration, but past performance is usually seen as the most reliable indicator of future success. Investment analysts' opinions may be consulted, but they are not the primary source of information for loan approval.

When Bankers Look for Evidence of Whether a Business Will