Retention/Credit Flashcards
If a line of credit has been established with a supplier and at the end of the month the contractor is unable to pay the entire amount they should
first go to the supplier and ask for an extension, explain the problem and expect to pay intrest charge
when a contractor starts out in business, it is important to establish a line of credit with a bank to meet some of the needs for working capital. COmmercial banks favor ____ loans of the type used to prvide a bid deposit or to provide the working capital necessary to complete the awarded contract with the loan requiring repayment when the contractor is paid
short term self liquidating
the loan officer will evaluate ____ when considering making the loan
-character
-capacity
-collateral
when making a long term loan, the bank usually limits borrowing for business ventures to ____ of the capitalization (debt deposit)
50%
____ loaners of lunds would be interested in the ration of total liabilities
long-term
which of the following best describes the total financial resources available to the contractor
equity
normally, does a small or large company have more overhead
small sized contractor
which document is used as an income statement
profit and loss statement
insurance companies or loaners of funds are interested in ratio measures that indicate relative proportion of the contractors assets supplied by creditors and owners. Which of the following is useful in identifying the likelihood of default
-net income to net worth
-net sales to net working capital
-net sales to net worth
which of the following is best qualified to submit financial statements
Certified Public Accountant (CPA)
____ funds are a good source for private venture capitalists
Equity
the problem with retentions is greater for which contractor
subs that finish their work early in the project
if retention is withheld until the job is completed, the subcontractor who finished early in the project could be at a financial disadvantage. The best way to remedy this is
tie the release of the proportional retention to the subs finished work instead of the total job
owners will often with hold a certian amount of the total payments owed to the contractor therby guarantting that the contractor finishes the job and pays his suppliers and subs. retentions are generally paid after
completion and expiration of the lein period
is retention a current asset (T/F)
True
