Scenario 9-2. Ryan has just graduated from college with a business degree. He has a wonderful idea for a new business called Ryan's Road Machines. He would like to sell a variety of all-terrain vehicles (ATVs) for the personal use of his selected clientele. Outstanding customer service will be his competitive advantage as he provides individual service to each of his customers. He has just one small problem, no capital. He knows that he must meet the five C's of credit when looking at external funding in order to prove his creditworthiness.
-In Scenario 9-2, in judging this C, the net worth of the business will be determined. The value of the assets minus the value of the liabilities will provide the determination for ______.

Question

Quizplus · Accepted Answer

Capital is determined by the net worth of the business, which is calculated as the value of the assets minus the value of the liabilities. This shows the financial resources that the business owner has, which can be used to support the business operations and secure loans.