Financial Statements and Analysis Concepts

What is the primary purpose of credit?

• To acquire money, goods, or services before payment

• To save money for future use

• To invest in stocks and bonds

• To avoid paying taxes

Who most commonly issues credit?

• Financial institutions

• Government agencies

• Non-profit organizations

• Individual investors

What is the fee for borrowing money called?

• Interest

• Dividend

• Commission

• Premium

Why do businesses need credit?

• To purchase assets like inventory or equipment

• To increase employee salaries

• To reduce production costs

• To expand marketing campaigns

What should be reviewed to assess a borrower's creditworthiness?

• Credit analysis

• Market trends

• Employee performance

• Product quality

What are the "Five Cs" related to?

• Credit analysis components

• Marketing strategies

• Investment options

• Tax regulations

Which of the following is NOT one of the "Five Cs" of credit analysis?

• Capacity

• Capital

• Collateral

• Currency

What is considered the most critical factor among the "Five Cs" of credit analysis?

• Capital

• Capacity

• Collateral

• Conditions

Which factor of credit analysis refers to the borrower's ability to repay the loan?

• Capital

• Character

• Capacity

• Conditions

What does collateral refer to in the context of credit analysis?

• The borrower's income

• A pledge of an asset owned by the borrower

• The borrower's credit score

• The interest rate of the loan