A banker is analyzing a company which operates in the automotive industry. Which of the following will likely be the banker's most important consideration in determining whether the company should receive a loan?
A)The automotive industry suffers from political pressures concerning environmental regulation of products.
B)Inflation has been consistently high for several years.
C)The company has state-of-the-art automated equipment which enhances the efficiency of its operating process.
D)The company has a large amount of interest payments related to other outstanding loans.

Question

Quizplus · Accepted Answer

The company's ability to manage its existing debt, as indicated by a large amount of interest payments related to other outstanding loans, is a critical factor in determining its creditworthiness and ability to take on and repay additional loans.

A Banker Is Analyzing a Company Which Operates in the Automotive