In analyzing a company's financial statements, which financial statement would a potential investor primarily use to assess the company's liquidity and financial flexibility?

Question

Quizplus · Accepted Answer

Choice "A" is correct. Liquidity ratios and coverage ratios focus on balance sheet account balances. Choice "B" is incorrect. Income statement information is primarily used for profitability analysis. Choice "C" is incorrect. The statement of retained earnings is primarily a reconciliation of the retained earnings account. Choice "D" is incorrect. The statement of cash flows assesses cash inflows and cash outflows.

In Analyzing a Company's Financial Statements, Which Financial Statement Would