Answer:
Option C, An decrease in the price of golf balls, is the right answer.
Explanation:
Option “C” is correct because as per the law of demand, the price of a commodity and its demand are inversely related to each other. If the price increases, then the demand for the commodity falls. If the price of the commodity falls, then the demand increases. Similarly, in the case of golf balls, when its price decreases then this decrease in price will result in an increase in demand for golf balls.
Answer:
A Banker's Analysis of an Automotive Company for Loan
Most important consideration in determining grant of loan:
c. The company has a large amount of interest payments related to other outstanding loans.
Explanation:
The large amount of interest payments related to other outstanding loans means that the automotive company is highly leveraged. To grant a bank loan will have added leverage risk.
In analyzing the request for a loan, a bank should consider the borrowing company's credit history. With so much in interest payments, the company has already borrowed heavily. The banker should consider the application of the past debts. Were they used in investments or for working capital purposes or to repay liabilities and shareholders.
The banker also needs to review the cash flow history with line with the above, to know how the past debts have been applied, as already stated above. In reviewing the cash flow history, the projections of the company should be tested for sustainability. "Has the company been meeting its past projections?" is a relevant question to understand.#
Lastly, the banker should also consider the existence of collateral for the loan, especially given that the company is highly leveraged. Are there unencumbered assets that can serve as collateral in case of default?
To review and report on internal controls over sales, purchasing and cash at Downe, your external audit firm should develop points for inclusion in your firm's report on identified internal control deficiencies at Downe.
In the cases described, the central deficiency is in the use of money not specifically allocated for payments and lack of adherence to company policy.
The consequences of these actions at Downe can mean a lack of control, organization and coordination of the flow of income and expenses, leaving businesses without correct records of capital utilization, legal compliance and inventory control.
It will therefore be necessary to restructure Downe's processes in order to implement a new policy that is passed on to all employees to be strictly enforced. In addition to greater control by managers and redesign of the organizational and work structure.
In this way, the company will guarantee that the processes occur in a planned, focused and strategic way, generating an improvement in the organizational culture and better positioning for the company in the market.
Find out more information about external auditor here:
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