A banker contemplating a loan to a company should focus on which sections) of the cash flow statement in order to determine the company's ability to repay the loan?

Question

Quizplus · Accepted Answer

The operating activities section of the cash flow statement shows the company's ability to generate cash from their primary operations, which is the most important factor in determining their ability to repay the loan. The financing activities section shows how the company is financing their operations and any debt repayments they are making, which can also be useful information for the banker. The investing activities section shows the company's investments in assets such as property, plant, and equipment, which may not be as directly relevant to their ability to repay the loan.

A Banker Contemplating a Loan to a Company Should Focus