Which option best describes how a banker views asset types in financing decisions?

• A. Only tangible assets are considered
• B. Both tangible and intangible assets are considered
• C. Liquidity ratios are ignored
• D. Assets are not evaluated

Answer: (B)

Bankers evaluate a borrower's asset base broadly, not just physical items. They look at tangible assets—things you can see and touch like real estate, equipment, and inventory—because these can be used as collateral and have clearer, more observable value. They also consider intangible assets such as patents, trademarks, goodwill, and other non-physical value that can contribute to the borrower's earning power. While intangible assets are harder to value, they can still support financing in many cases, and lenders often adjust terms based on how all assets together support repayment. Because asset quality and liquidity influence how much risk the lender takes, assets aren’t ignored or dismissed from consideration. So the best description is that bankers consider both tangible and intangible assets in financing decisions.