Which of the following would be used to determine the ability of a company to pay dividends and interest on borrowings?
A)the income statement.
B)the statement of cash flows.
C)the balance sheet.
D)management discussion and Analysis.

Question

Quizplus · Accepted Answer

The statement of cash flows provides information on a company's cash inflows and outflows, which is necessary to determine their ability to make payments on dividends and interest on borrowings. The income statement shows a company's profits, but not necessarily their cash position. The balance sheet shows a company's assets and liabilities at a specific point in time, but does not provide information on cash flows. Management discussion and analysis may provide insight into a company's financial performance, but it is not a financial statement itself.

Which of the Following Would Be Used to Determine the Ability