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Ent Fin Chapter 13 Exam Questions With Verified Answers

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Ent Fin Chapter 13 Exam Questions With Verified Answers What are the five C's of Credit Analysis? - answerThe five C's of credit analysis are capacity, capital, collateral, conditions, and character. Name three of the common loan restrictions and explain their relation to new venturing financi...

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  • September 29, 2024
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Ent Fin Chapter 13 Exam Questions With
Verified Answers



What are the five C's of Credit Analysis? - answer✔The five C's of credit analysis are capacity,
capital, collateral, conditions, and character.
Name three of the common loan restrictions and explain their relation to new venturing
financing. - answer✔While many different restrictions can be placed on businesses, a few are
described here:


(1) Limits on total debt are placed on venture firms to limit the amount of leverage the firm has;


(2) Dividend restrictions are placed on firms to prevent the firm from paying out the newly
issued debt in the form of a dividend;


(3) Maintenance of financial statements may be required to provide the lending institution with a
current representation of the company's financial situation.

Additional loan restrictions - answer✔See Figure 13.2 for some additional common loan
restrictions including:


(4) restrictions on additional capital expenditures, (5) restrictions on sale of fixed assets, (6)
performance standards on financial ratios, and (7) current tax and insurance payments

What is meant by venture banks? - answer✔The term "venture banks" refers to a type of debt
investor (lender) that will consider lending to early stage ventures that do not have proven cash
flows.

How do venture banks differ from traditional commercial banks? - answer✔They typically offer
debt to accompany venture equity and will look for compensation in both interest payments and

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