Which of the following financial statements would be most useful if an analyst wants to know the likelihood of repayment of business debts?
A) income statement
B) balance sheet
C) statement of retained earnings
D) statement of cash flows

Question

Quizplus · Accepted Answer

The balance sheet provides information about a company's assets, liabilities, and equity, which can be used to calculate financial ratios that indicate the company's ability to repay debts. Examples of relevant ratios include the debt-to-equity ratio and the current ratio. The income statement provides information about a company's revenues and expenses over a period of time, but does not provide information about the company's financial position or ability to repay debts. The statement of retained earnings shows changes in a company's retained earnings account over time, but does not provide information about the company's debt repayment capacity. The statement of cash flows shows the inflows and outflows of cash over a period of time, but does not provide information about the company's financial position or ability to repay debts.

Which of the Following Financial Statements Would Be Most Useful