CS Executive · Corporate Accounting and Financial Management · Financial Statement Analysis
A short-term creditor of a company is mainly interested in the analysis of which aspect of the financial statements?
A short-term creditor mainly analyses the liquidity position, meaning the firm's ability to pay current obligations as they fall due from current assets. Long-term growth, share price and dividend yield are concerns of equity investors rather than of suppliers or lenders extending short-term credit.
- ALong-term earnings growth over ten years
- BLiquidity position and ability to meet current obligationsCorrect
- CMarket price movement of the equity shares
- DDividend yield on equity capital
Explanation
Short-term creditors are paid from current assets in the near term, so they focus on liquidity, such as the current and quick ratios. Long-term growth, share price and dividend yield matter mainly to equity investors.
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