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 owner's equity
D) statement of cash flows

Question

Quizplus · Accepted Answer

The balance sheet provides information about a company's assets, liabilities, and equity at a particular point in time, giving insight into the company's ability to meet its financial obligations such as debt repayment. The income statement shows a company's revenues, expenses, and profits over a period of time and does not directly indicate debt repayment ability. The statement of owner's equity shows the changes in a company's equity due to transactions such as investments and dividends and does not provide information on debt repayment ability. The statement of cash flows shows a company's cash inflows and outflows, but does not directly indicate the ability to repay debts.

Which of the Following Financial Statements Would Be Most Useful