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

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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Creditors look at the balance sheet to see whether the company:

Multiple Choice

is profitable.
owns enough assets to pay what it owes to creditors.
has had a positive cash flow from operations.
is paying sufficient dividends to stockholders.

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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