Question
A potential customer who imports clothing for sale through their online store has had a fire that has completely destroyed their only warehouse. On initial
A potential customer who imports clothing for sale through their online store has had a fire that has completely destroyed their only warehouse. On initial review of the customer financial statements you ascertain that not only has the value of the warehouse been written off, but that operating profits were in any case in decline and there is considerable doubt over whether the warehouse was insured. What should your next step be?
A) Your preliminary review suggests that you should conduct a more careful review of the financial statements, focusing on the cause of the fire.
B) Your preliminary review suggests that there may be an attractive opportunity to loan to this customer at a high rate of interest, providing there are no other factors that may be revealed by a more thorough review.
C) Your preliminary review suggests that the request is high risk and that you should decline the request for a loan.
D) Your preliminary review has identified a few key issues, but you need to satisfy yourself that there are no other relevant factors by conducting a more thorough review of the financial statements.
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