ACCA Applied Knowledge · Business and Technology · Financial information provided by business
A bank is deciding whether to lend to Delta Ltd. Which use of financial information is the bank primarily making?
The bank is using financial information to assess whether Delta can pay interest and repay the loan when due, looking at liquidity, profitability and gearing. Setting standard costs and deciding bonuses are internal management uses, not lender decisions.
- AAssessing the ability to pay interest and repay the loanCorrect
- BSetting standard costs for production
- CDeciding employee bonus levels
Explanation
Lenders use financial information to assess liquidity, solvency and the capacity to service and repay debt. Standard costs and bonuses are internal matters.
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