Question

The creditors of a company analyse financial statements so that they can focus on A. the...

The creditors of a company analyse financial statements so that they can focus on

A. the company's amount of debt.


B. the company's ability to generate sufficient cash flows to meet all legal obligations first and still have sufficient cash flows to meet debt repayment and interest payments.


C. the company's ability to meet its short-term obligations.


D. All of the above.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The correct option is D, all of the above.

The creditors of the company, focus on the financial statements so that they can focus on the amount of debt , too much debt is bad for the financial health of the company. Creditors do not extend credit to companies with too much debt.

The company's ability to pay its short term obligations, and it's ability to pay off debt repayments and interest payments is also considered. Creditors want to ensure the interest and principal is paid on the organisations debt securities (e.g., bonds) when due.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which of the following may be true of debt covenants? A. Limit the issuance of additional...
Which of the following may be true of debt covenants? A. Limit the issuance of additional debt senior to the obligation. B. Specify minimum levels of selected financial ratios. C. Specify minimum levels of earnings coverage. D. All of the above. All other things being equal, all of the following actions will increase financial leverage except: A. Repurchase stock B. Sell accounts receivable at face value C. Issue more bonds D. Pay higher dividends Which statement is TRUE? A.    Liquidity...
1. Financial statement analysis involves all of the following except: Multiple Choice The application of analytical...
1. Financial statement analysis involves all of the following except: Multiple Choice The application of analytical tools to general-purpose financial statements and related data for making business decisions. Transforming accounting data into useful information for decision-making. Helping users to make better decisions. Helping to reduce uncertainty in decision-making. Assuring that the company will be more profitable in the future. 2 The building blocks of financial statement analysis do not include: Multiple Choice External analyst services. Solvency. Profitability. Market prospects. Liquidity...
Why should you reformulate the income statement and balance sheet by separating the income/expenses and the...
Why should you reformulate the income statement and balance sheet by separating the income/expenses and the assets/liabilities associated with operating and financing? Group of answer choices a.This allows a focus on the company’s ability to meet its debt and avoid bankruptcy b.This allows a focus on the company’s ability to generate future cash flows and dividend payments c.This separation permits a focus on the company's operations in our forecasting and valuation d.This separation permits a focus on how well a...
1. You are not overwhelmed with MacDonald’s numbers so you look at Wendy’s financial statements too....
1. You are not overwhelmed with MacDonald’s numbers so you look at Wendy’s financial statements too. You decide to analyze their debt situation by creating a ratio of long-term debt to earnings before interest and taxes. Where can you find the amount of long-term debt, and the amount of earnings before interest and taxes respectively? A. Income Statement; Income Statement B.Balance Sheet; Income Statement C.Statement of Cash Flows; Income Statement D.Balance Sheet, Statement of Cash Flows E. Income Statement; Balance...
A banker contemplating a loan to a company should focus on which section(s) of the cash...
A banker contemplating a loan to a company should focus on which section(s) of the cash flow statement in order to determine the company's ability to repay the loan? A. Operating and investing activities B. Investing activities C. Financing activities D. Operating activities Typical financing activities do NOT include the following: A. Purchase of shares for retirement. B. Purchase of short- or long-term investments for cash C. Principal payments on short- and long-term borrowings D. Proceeds from issuance of short-...
Which of the following is correct about the statement of cash flows? A. It provides information...
Which of the following is correct about the statement of cash flows? A. It provides information about a company’s cash receipts and cash payments during an accounting period. B. It provides information about a company’s operating, investing, and financing activities during the period. C. It provides information that investors and creditors can use to assess the company’s ability to generate positive future cash flows, ability to pay its liabilities, ability to pay dividends, and its need for additional financing. D....
Accounting for Financial Management: Free Cash Flow The focus on traditional financial statements is -Select-marketaccountingreplacementItem 1...
Accounting for Financial Management: Free Cash Flow The focus on traditional financial statements is -Select-marketaccountingreplacementItem 1 data rather than cash flow. However, cash flow is important to investors, managers, and stock analysts. Therefore, decision makers and security analysts need to modify financial statement data provided to them. An important modification is the concept of free cash flow (FCF). Many analysts regard FCF as being the single and most important number that can be developed from the income statements, even more...
M7. Financial Statements Homework Use the following information about Hospital X to create a statement of...
M7. Financial Statements Homework Use the following information about Hospital X to create a statement of cash flows: (review chapter 12 for an example) 2012 2011 Purchase of Property and Equipment ($30) ($25) Securities Purchases ($30) ($25) Contributions $10 $10 Cash Received from Patient Services $3,985 $4,550 Cash Paid to Employees and Suppliers ($3,900) ($4,500) Cash and Equivalents, Beginning of the Year $20 Interest Paid ($15) ($16) Interest Earned $5 $12 Repayment of Long-term Debt ($2) ($12)
Below you can find the comparative financial statements of “Alpha – Beta” company in € for...
Below you can find the comparative financial statements of “Alpha – Beta” company in € for years 2017 and 2018: Comparative Balance Sheet of “Alpha- Beta” Assets 2018 2017 Liabilities & Stockholders’ Equity 2018 2017 Fixed Assets Property, Plant and Equipment Accumulated depreciation Net Property, Plant and Equipment Other Assets Total Fixed Assets Current Assets Cash and Cash Equivalents Accounts receivables Inventory Prepaid Expenses Total Current Assets Total Assets 3,250,000 (425,000) 2,825,000 725,000 3,550,000 300,000 900,000 1,100,000 100,000 2,400,000 5,950,000...
1) When an investing company owns less than 50 percent of another company, the companies must...
1) When an investing company owns less than 50 percent of another company, the companies must prepare consolidated financial statements. 2) Goodwill is amortized on the consolidated financial statements. 3) To compare companies that differ in size, analysts use ________. A) MD&A B) 10-K filings with the Securities and Exchange Commission C) common size financial statements D) consolidated financial statements 4) Comparing a company's current ratio today with the same company's current ratio for the past ten years is called...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT