Asked by Clayton Jarvis on Jun 30, 2024
Verified
Determining the applicant's ability to repay a loan by examining the amount of cash and marketable securities and the projected cash flows is which of following five C's?
A) Capacity
B) Capital
C) Competency
D) Character
Projected Cash Flows
This refers to the forecasted movement of money in and out of a business over a specific period, helping to estimate its financial health and operational viability.
Capacity
The maximum level of output that a company can sustain to produce in a given period under normal conditions.
Marketable Securities
Financial instruments that can be easily converted into cash, such as stocks or bonds.
- Recognize the five essential "C's" of credit and their importance during the loan application procedure.
Verified Answer
AR
Alejandra RubioJul 01, 2024
Final Answer :
A
Explanation :
Capacity refers to the borrower's ability to repay a loan by assessing their financial resources, including cash, marketable securities, and projected cash flows.
Learning Objectives
- Recognize the five essential "C's" of credit and their importance during the loan application procedure.