Question

If the firm want to avail a bank loan of Rs 100000 then the banker will be interested to look into which part of the Financial Statement to check the loan repayment capacity of the Firm

Answer 1

Answer :

Equity and liabilities

Explanation :

Equity : owners fund

liabilities : obligation to pay someone's money back

bank will look at your debt to equity ratio.

debt to equity ratio reflects the ability of shareholder equity to cover all outstanding debts in the event of a dissolution of a firm.

an ideal debt to equity ratio is around 1 to 1.5.

however it varies from industry to industry.