Issuing Credit

What is the primary purpose of issuing credit?

• To increase sales

• To decrease expenses

• To improve employee satisfaction

• To reduce inventory costs.

In the context of issuing credit, a higher credit score generally indicates a ______.

• lower risk

• higher risk

• no change in risk

• increased interest rate

Why do businesses need credit?

• To increase liabilities

• To manage cash flow

• To reduce expenses

• To avoid taxes.

Fill in the blank: To evaluate creditworthiness, businesses need to identify key financial documents such as ______.

• Marketing plans

• Financial statements

• Employee records

• Inventory lists

Which of the following is a key component of financial literacy?

• Introduction to Credit

• Financial Statements

• Ratio Analysis

• All of the above.

What is credit?

• The ability to acquire money, goods, or services before payment

• A type of savings account

• A form of investment

• A government bond.

Credit is most commonly issued by ________.

• Retail stores

• Financial institutions

• Government agencies

• Non-profit organizations.

Why do businesses need credit?

• To purchase assets such as inventory or equipment

• To increase employee salaries

• To expand office space

• To hire more staff.

Which of the following is a reason for businesses to need credit?

• To replace equity or to repay owners or investors

• To conduct market research

• To improve customer service

• To develop new products.

Which of the following is a question that should be asked to potential borrowers?

• What is your favorite color?

• Who is the principal decision-maker?

• Do you like coffee?

• What is your pet's name?