A. You are the external auditor of ABC manufacturing company locate in Palestine. ABC company is considering expansion of its facility in order to meet increasing demand on its products. Thus, the company is evaluating different alternatives to finance this expansion. ABC company expects that debt contracts will place restrictions of long term debt paying ability (such as debt to total assets ratio) and liquidity of short term assets (such as current ratios or cash ratios). 1) Discuss different examples related to judgment in accounting and accounting estimates that lenders are expected to investigate before making the credit decision. 2) In general, what are conditions that would lead the external auditor to predict that management might manage earnings downward.