Creditors look at the balance sheet to see whether the company:
A)is profitable.
B)owns enough assets to pay what it owes to creditors.
C)has had a positive cash flow from operations.
D)is paying sufficient dividends to stockholders.

Question

Quizplus · Accepted Answer

Creditors are mainly interested in assessing whether the company generating enough cash to make payments on its loan and is the company has enough assets to cover its liabilities.The balance sheet reports the amount of assets,liabilities and stockholders' equity and could be used to evaluate the amount of cash and the amount of liabilities to see whether the company's resources are sufficient to pay creditors.

Creditors Look at the Balance Sheet to See Whether the Company