Question
Assume you are a business banker and a firm comes up to you and requests a shot- term (90 days) unsecured loan, a loan that
Assume you are a business banker and a firm comes up to you and requests a shot- term (90 days) unsecured loan, a loan that would be quite similar to the firm selling commercial paper. 1. Do you look at any profitability ratios? Why or why not? 2. Is there anything from the income statement that would have any relevance to your decision? Explain. 3. What would you look for on the firms cash flow statement? Be specific. 4. There is one key ratio you will calculate and that is derived from the firms balance sheet. What is it and why would you look at that ratio?
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