Asked by Catherine Collins on Jul 02, 2024
Verified
Certain financial statement ratios are quite useful in predicting loan default.
Financial Statement Ratios
Analytical tools used to evaluate relationships between financial statement items, aiding in assessing a company's performance and financial health.
Loan Default
The failure to meet the legal obligations or conditions of a loan, typically when a borrower is unable to make the required payments.
- Determine the success of various tactics applied in analyzing credit.
Verified Answer
HP
HARINDER PAL SINGHJul 02, 2024
Final Answer :
True
Explanation :
Financial statement ratios such as debt-to-income ratio, current ratio, and debt service coverage ratio can provide insight into a borrower's financial health and likelihood of defaulting on a loan. Lenders often use these ratios to assess creditworthiness and make informed lending decisions.
Learning Objectives
- Determine the success of various tactics applied in analyzing credit.
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