A banker is analyzing a company which operates in the petroleum industry.Which of the following might be a major consideration in determining whether the company should receive a loan?
A) The petroleum industry suffers from political pressures concerning the selling price of its products.
B) Inflation has been high for several years in a row.
C) All companies in the petroleum industry use the same accounting principles.
D) The company has a large amount of interest payments related to many outstanding loans.

Question

Quizplus · Accepted Answer

The company's existing large amount of interest payments related to many outstanding loans is a critical factor in determining its ability to take on additional debt and repay it, which is a major consideration for a banker when deciding on loan approval.

A Banker Is Analyzing a Company Which Operates in the Petroleum