Question

which two of the four c’s of credit have to do with earning Potential and available cash

Answer 1

Four C's of the credit are:

Capital, Capacity, Credit history and the colleteral.

The above factors are used to determine the credit worthiness of a business entity.

Two C's that have to do with earning potential and available cash.

1. Capital - It is the cash that the business have or in other words it assesses that whether the business have sufficient funds to repay their creditors. This is the mostly reviewed C's of the credit to know the available cash with the organisation. The assessment is made with the balances given in the balance sheet items such as working capital, net worth and the cash flow statement.

2. Capacity - It is the monthly stability of the income it reveals that whether the business's income is high enough or stable to cover a mortgage. Lenders often review the income statement, employment history and the earning potential.