Business and finance: Why would a potential lender be interested in these two classes of assets?

Business & Finance
Tutor: None Selected Time limit: 1 Day

Review the definitions of current and fixed assets in the chapter readings.

Why would a potential lender be interested in these two classes of assets 
when reviewing the balance sheet of a company applying for a long-term loan?
Dec 13th, 2015

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the assets of a company are very important in the decision making of a lender. the current assets are used to determine the current ratio. if the current ratio is 2:1 the lender will start noticing some signs of problem when they undertake the action of lending them. current assets represents the solvency rate of a company.

secondly, fixed assets are used to show the lender what could be used as the guarantor in case they fail to pay the debts offered. in this case, any lender will make sure they know the worth of the company by evaluating their total assets.

Please let me know if you need any clarification. I'm always happy to answer your questions.
Dec 13th, 2015

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