A potential creditor's judgment about granting credit would be most influenced by the potential customer's:
A) current ratio at the end of the prior fiscal year.
B) most recent acid-test ratio.
C) trend of acid-test ratio over the past three years.
D)practice with respect to taking cash discounts offered by current suppliers.

Question

Quizplus · Accepted Answer

The potential creditor's judgment would be most influenced by the potential customer's practice with respect to taking cash discounts offered by current suppliers, as it reflects the customer's ability to manage their cash flow and pay their bills on time. This information helps the creditor to assess the level of risk involved in granting credit to the customer. The other options provide financial ratios that are helpful in analyzing the customer's financial health, but do not give as much insight into their payment behavior.

A Potential Creditor's Judgment About Granting Credit Would Be Most