Asked by Carlee Maree on Jun 18, 2024
Verified
Predicting loan default and bankruptcy are relatively easy tasks if financial ratios are carefully analyzed.
Loan Default
Occurs when a borrower fails to pay back a debt according to the initial agreement.
Financial Ratios
Metrics derived from financial statement analysis used by investors and analysts to evaluate a company's financial health and performance.
Bankruptcy
A legal proceeding involving a person or business that is unable to repay outstanding debts, leading to the liquidation or reorganization of assets under the law.
- Identify the importance and challenges of predicting loan default and bankruptcy through financial analysis.
Verified Answer
KA
kelsie abundizJun 25, 2024
Final Answer :
False
Explanation :
Predicting loan default and bankruptcy involves complex factors beyond just analyzing financial ratios, including market conditions, management decisions, and unforeseen economic events, making it a challenging task.
Learning Objectives
- Identify the importance and challenges of predicting loan default and bankruptcy through financial analysis.