Bondholders primarily analyze financial statements to:
A) assess the cash flows that the firm will generate from its operations.
B) determine the firm's profitability, the return on equity for that period, and the dividend they are likely to distribute.
C) focus on the value of the company stock.
D) determine the likelihood of the return of their principal at maturity.

Question

Quizplus · Accepted Answer

Bondholders are primarily interested in the company's ability to make timely interest and principal payments. Therefore, they analyze financial statements to determine the likelihood of the return of their principal at maturity. Bondholders are less concerned with profitability or dividends, unlike equity holders. The value of the company stock is also not a primary focus for bondholders.

Bondholders Primarily Analyze Financial Statements To