A new company was set up two years ago using the personal financial resources of the founders.
These funds were used to acquire suitable premises.
The company has entered into a long-term lease on the premises which are not yet fully fitted out.
The founders are considering requesting loan finance from the company’s bank to fund the purchase of custom-made advanced technology equipment.
No other companies are using this type of equipment.
The company expects to continue to be profitable for the forseeable future.
It re-invests some of its surplus cash in on-going essential research and development.
Which THREE of the following features are likely to be considered negatives by the bank when assessing the company’s credit-worthiness?
A . The equipment is advanced technology custom-made equipment.
B . The company will continue to remain profitable and to generate net cash.
C . The company premises are on a long-term lease but are not yet fully fitted out.
D . The founders invested their personal financial resources in the company.
E . Essential on-going research and development expenditure is required.
Answer: A,C,E
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