Answer to Question #210297 in Finance for Muhammad Ali

Question

Q no # 2 Consider yourself as a manager of a bank and one customer approaches you to get loan, then how you will calculate the financial credibility of customer based on analysis of Quick ratio, Debt to total assets ratio, Return on Equity ratio and current ratio. The financial statement at the end of December

are $40,000, Total debts $65,000, inventory $25,000, Net profit after tax $20000 and shareholders’ Equity $56,000. What will be your decision as manager either you will consider him for giving loan or not?

Answer 1

no. this is because the net profit is less than the total debts.