Final answer:
Quattro Lending Company should focus on Eleance Inc.'s current and long-term liabilities to evaluate their ability to repay debts. The considerations include Eleance's cash flow, financial stability, interest rate changes, and payment history, which are pivotal for managing loan-related risks in the secondary market.
Step-by-step explanation:
When Quattro Lending Company is considering lending a large sum to Eleance Inc., it should pay close attention to Eleance's current liabilities and long-term liabilities.
Current liabilities, such as accounts payable and short-term loans, can affect a company's cash flow and its ability to repay short-term debts. Long-term liabilities, on the other hand, can impact the firm's financial stability and solvency over the longer term. A borrower's ability to service its debt is critical in assessing the risk associated with a loan.
A secondary market plays a key role for financial institutions in managing risk. Financial services companies may buy or sell loans in this market to adjust their exposure. For instance, if interest rates have risen since a loan was made, a bank might be willing to pay less for such a loan due to the lower relative interest yield. Conversely, if a borrower has demonstrated financial strength by declaring high profits, the loan might be more valuable. Assessing the value of loans takes into account such factors, alongside the market's interest rate movements and the borrower's payment history.