Which ratios would a banker be most interested, Financial Management

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Which ratios would a banker be most interested in when considering whether to approve an application for a short-term business loan? Explain.

Bankers and another lenders use liquidity ratios to observe whether to extend short-term credit to a firm.  Liquidity ratios calculate the ability of an organization to meet its short-term obligations.  These ratios are significant because failure to pay such type of obligations can lead to bankruptcy.  Usually, the higher the liquidity ratio, the much more able a firm is to pay its short-term obligations.


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