If the company's balance sheet is the same for both scenarios, what could have caused the changes in the ratios for Scenario 2?

The correct answer highlights that a longer amortization period in the loans could lead to changes in financial ratios even when the company's balance sheet remains unchanged. A longer amortization period typically results in lower monthly payment amounts, which can positively impact cash flow available for operations or other investments.

This change in cash flow dynamics can subsequently influence various financial ratios, such as the debt service coverage ratio or current ratio. For instance, with more cash available due to reduced repayment obligations, liquidity ratios may improve, demonstrating a stronger short-term financial position.

In addition, a longer amortization period can reduce the impact of interest payments on profitability during the early years of the loan, affecting return on equity and profit margins positively. These changes in cash flow and profitability indicators reflect how management of debt impacts overall financial health without necessitating any immediate alterations to the balance sheet itself.

In contrast, the other options, such as a lower interest rate or a shorter amortization period, would generally lead to reduced cash outflow in the short run but may not produce as significant changes in financial ratios when the balance sheet remains unchanged. A higher loan amount issued might also increase financial leverage and obligations, likely affecting ratios negatively if other factors aren't adjusted concurrently.