Question

55.

Financial statement analysis

		Is hard to do.
		May only raise questions
		Is the complete credit analysis
		Isn’t necessary.

56.

Which of the following would not be considered an Act of Bankruptcy?

		The debtor gives notice to a creditor that a payment of debt is about to be suspended.
		The debtor ceases to meet liabilities as they become due.
		The debtor exhibits financial statements to a creditor which show the debtor is insolvent.
		The debtor writes a cheque for which there are insufficient funds.

Answer 1

ANSWER 55 :- Financial statement analysis is the complete credit analysis.

JUSTIFICATION:- Financial statement analysis can be considered a complete credit analysis as it tells a lot about the ability of a borrower to repay loans and credit analysis is on of the most common uses of financial statements.

ANSWER 56:- The debtor exhibits financial statements to a creditor which show the debtor is insolvent.

JUSTIFICATION:- A sector becomes bankrupt when he is unable to repay liabilities as and when they become due,A mere statement of a situation that the amount of liability is more than the amount of assets cannot be considered as bankruptcy.