Which statement about reviewing a personal financial statement is true?

• A. Joint filing means assets may not be available in liquidation
• B. Global cash flow of guarantor and lessee may paint a more comprehensive picture
• C. Both statements are true
• D. Neither statement is true

Answer: (C)

When reviewing a personal financial statement for lending, two ideas come into play: looking at the whole picture of cash flow across related parties, and understanding how asset ownership affects what can be recovered if things go bad.

Global cash flow is about more than one person’s finances. If a guarantor backs a lease, their income and obligations influence the ability to make the lease payments. By combining the cash flows of both the guarantor and the lessee, you get a fuller view of the true repayment capacity. This helps avoid overestimating risk or reliability by considering only the lessee’s finances, and it highlights how support from the guarantor can strengthen or weaken overall credit quality.

Asset ownership matters for liquidation. When assets are held jointly with another party, the lender may not be able to claim the entire asset to satisfy a debt. The portion owned by the other party remains outside the debtor’s sole control, so liquidation proceeds may be limited to the debtor’s share or subject to co-owner rights. This means joint filing can reduce the portion of assets available to satisfy the loan in liquidation.

Because both the broader cash-flow view and the implications of joint ownership are correct, the statement that both are true is the best answer.