The past performance evidences factors influencing the firm’s present condition and past performance that may foreshadow difficulties, or indicate the likelihood of success, in the borrower's ability to repay a bank loan at some future time.If asset protection is primary rationale, no payback on an on-going basis is expected.Self-liquidating loans are not always a good credit choice.For example, they do not make sense for fixed assets, such as real estate, or depreciable assets, such as machinery.Current assets are any assets that can be reasonably liquidated into cash within a set time frame, usually a year or less.
A permanent current asset is the minimum amount of current assets a company needs to continue operations.Managers, therefore, prefer to install long-term financing for the portion of current assets that they believe is necessary to sustain operations; they want the predictability.The downside is the possibility that some of the long-term debt will not be utilized from time to time, resulting in higher-than-necessary interest expense, but this is normally an acceptable trade-off. The concept of a self liquidating asset implies that...? Depreciation expence was ,000 and intrest expence for the year was ,000. Selling a adminstrative expences were 9 percent of sales.