The extent to which inventory jinancing may be used depends on
A. marketability of pledged goods
B. price stability of goods
C. perishability of goods
D. all of the above
Well if I were a loan officer at a bank I would want to know all of this infomation prior to approving a loan that used a companies inventory as collateral. My answer is D all of the above.
I agree.
thank you
You are absolutely correct! The extent to which inventory financing may be used depends on several factors, including the marketability of the pledged goods, price stability of the goods, and perishability of the goods. These factors are important for a loan officer to consider before approving a loan that uses a company's inventory as collateral.
To arrive at this answer, let's break down each option:
A. Marketability of pledged goods: This refers to how easily the goods can be sold in the market. If the goods are in high demand and have good marketability, it increases the likelihood of the inventory being sold quickly in the event of default. Loan officers would prefer inventory that has good marketability as it reduces the risk for the bank.
B. Price stability of goods: This refers to how consistent the prices of the goods are over time. If the prices of the inventory are stable, it ensures that the collateral's value will not fluctuate drastically, reducing the risk for the lender.
C. Perishability of goods: This factor is particularly important for industries where inventory has a limited shelf life, such as the food industry. Perishable goods can deteriorate or become unsellable if not sold within a certain timeframe. Loan officers would have to assess the perishability of goods before approving a loan since perishable inventory poses higher risks.
Considering the significance of all these factors in determining the feasibility of inventory financing, the correct answer is indeed D, all of the above.