Which of the following constitute(s) a spontaneous financing source? 1. Accounts receivable 2. Accounts payable 3. Inventory 4. Short-term investments

are designed to indicate the potential default risk that lenders are undertaking when they grant a loan. Repayment capacity ratios O Financial efficiency ratios Profitability ratios Solvency ratios Liquidity ratios

How do creditors assess risk when lending funds to a company? a. By establishing covenants in the borrowing agreement b. By monitoring the borrower’s debt-to-equity ratio c. By checking a prospective borrower’s credit rating before lending to it d. All of the above answers are correct.

Question 3