Investors and Creditors Look at the Balance Sheet to See

question 90

Multiple Choice

Investors and creditors look at the balance sheet to see whether the company:

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

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Definitions:

Capital Surplus

Represents the amount received by a company from the sale of shares above their par value, often reflecting the excess of invested capital over the nominal value of equity.

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, thereby possessing certain rights and responsibilities.

Charter

A legal document that establishes a corporation or city, outlining its rights, privileges, and purposes.

Par Value

The face value of a bond or stock as stated by the issuing company, which may differ from its market value.