Question

If you were going to the bank to borrow money, would it be important to the banker to know which of your liabilities were current and which were long-term? Explain.

Answer 1

While Borrowing money from Bank, Bank do lookinto your repaying capacity and also the liabilities you already possess. Based on the terms of your new loans tenure, they will look into your future liabilities and your repayments, default if any etc.

They will project your future income based on the past recoreds, and your repayments and liabilities pending tenure to finalise thaier loan amount eligibility and tenure.

So they require to know current and long term liabilities separately.