Question

Select the appropriate answer from the alternatives given below & rewrite the completed statements :

From financial statement analysis, the creditors are interested to know _____________.
a) liquidity
b) profit
c) sale
d) share capital

Answer 1

From financial statement analysis, the creditors are interested to know liquidity.

Explanation: The analysis of financial statements helps creditors in assessing the short-term liquidity position of a business. Such analysis helps them in judging the firm’s ability to repay the debts and interest obligations timely. Analysis of financial statements helps creditors in gaining insight about the solvency and profitability of business concerns and, thereby, its liquidity position.

Hence, the correct option is A.