Sabiha is the small business loan officer at Regional National Bank. It is her job to approve loans for small businesses so that the local economy will grow. One factor she looks at carefully when making loan decisions is the amount of debt the firm already has outstanding. Which of the following financial statements should she look at to find this information?

Question

Quizplus · Accepted Answer

Sabiha should look at the balance sheet to find the amount of debt the firm already has outstanding. The balance sheet shows the liabilities of the company, which includes any outstanding debt or loans. The income statement shows a company's revenue and expenses over a period of time, the statement of cash flows shows how cash moves in and out of the business, and the cash budget is a projection of future cash inflows and outflows. None of these statements would provide a clear picture of the amount of debt already taken on by the firm.

Sabiha Is the Small Business Loan Officer at Regional National