C Low level of D. Reporting capabie 14. Trade a of which ouress day analytical t

Question

C Low level of D. Reporting capabie 14. Trade a of which ouress day analytical tools B Bank a C. Public D, Reference materials and periodicals and trade checks 15. Which market factor tends to reduce risks to revenues A. Busines B. Firm's market share and trend C. Performance or ratios compared to peers O Established relationships with loyal customers s status as global, national, regional or local player 16.Which of the following is a common mitigating factor to the risk of A. Asset replacement insurance B. Large numbers of business owners or shareholders C. Depth of in-place, supporting managers D. Detailed cash budget 17. The degree to which fixed assets are necessary to operate in an industry is which industry risk? A. Obsolescence B. Capital intensity C. Cyclicality D. Legal, regulatory and labor outlook 18. What does an on-site inspection or follow-up call enable a lender to do? A. Determine whether the facility appears organized B. Compare the financial ratios of the business with its industry C. Conduct a trend analysis D. Eliminate a credit investigation 19. Quality of raw materials used is a key financial risk of which industry type? A) Manufacturer B. Wholesaler C. Retailer D. Service business 20. Which competitive force can be a major risk when there are concentrations amounts of inputs such as raw materials, components, labor and services? A. Bargaining power of customers B. Bargaining power of suppliers

Explanation / Answer

14 .D. Reference materials and periodicals Industry periodicals & industry-related news items in dailies,help to reveal the creit-worthiness of the borrower. 15. B. Firm's market share and trend High consumer preferences ---which is a market reaction-- lead to high market shares in terms of increased sales & hence increased revenue This results in increased profitability. 16. B. Large numbers of business owners or shareholders Having large numbers on the board,will, to a certain extent help to reduce the viod created,even if some management people leave the organisation--- not detrimental to its regular operations. 17. C. Capital intensity The degree to which fixed assets are necessary to operate in an industry depends upon whether the industry is machine-reliant or labor-reliant. Machine-reliant are called capital-intensive industries--which have higher levels of fixed assets ,in their balance sheet. 18. D. Eliminate a credit investigation to a certain extent,if not fully---the lender can make a self-assessment ,that comes with experience, of the capacity of thr borrower to pay interests & principal ,on time. 19. A. Manufacturer As the quality of his final output ,is dependent on quality of raw materials that are used as inputs. His market share depends on the quality of his products.

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