Interest to the loan officer


Bob meets next month with a banker to secure a 60 day line of credit. He asks Mark which financial ratios will be of the most interest to the loan officer. How should Mark respond, any why?

(A) The total debt ratio, times interest earned ratio, or cash coverage ratio to discover the company's amount of long term debt

(B) The inventory turnover, receivables turnover, or asset turnover ratio to judge the firm's ability to use convert assets to sales

(C) The profit margin ratio, ROA ratio, or ROE ratio to understand the profitability of the company

(D) The current ratio, quick ratio, or cash ratio to determine the firm's liquidity

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Accounting Basics: Interest to the loan officer
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