The Five C’s of Credit include all the following EXCEPT Collateral Conditions Character Credibility All of...

The Five C’s of Credit include all the following EXCEPT

		Collateral
		Conditions
		Character
		Credibility
		All of the answers are correct

Expert Solution

Answer is the last option : All of the above.

% C's of credit are as follows :

Collateral : Collateral is the asset against which the credit is being taken. It helps a lender to secure a loan. In case of default by the borrower, the amount of loan can be recovered yb this asset.

Condition: The conditions on credit agreemenrt influence the lender to give the credit or not. The conditions include, principle amount of laon, inetrest rate, tenure of loan, covenants etc.

Character : Character of the borower matters a lot in giving any credit or loan. Prior history of loan and interest repayment is taken into consideration

Credibility or Capability : It considers the capability of the borrwer to repay the loan. Wheather the borrower generates enough cash to repay the interest and principle amount and carry on the operations. It requires calculation of certain ratios from income statement and balance sheet.

Capital : In this, lender take into account the capital set aside by the borrower to make the investment or any down payment. In other words , it the aount of owners capital being used for the investment.

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