Which of the Following Statement(s)describe the Principal Reason(s)why Investors and Creditors

question 33

Multiple Choice

Which of the following statement(s) describe the principal reason(s) why investors and creditors use financial statement analysis? 1.To assess the risks associated with expected returns
2) To evaluate top and middle level management
3) To predict the amount of expected returns
4) To establish recommended dividend and interest payments

• A)1 and 2
• B)1,2,and 3
• C)1 and 3
• D)1 and 4
• E)2,3,and 4

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Definitions:

Cash Collection

The process of receiving cash payments from customers, typically related to sales or services provided.

Trust Receipts

Documents that acknowledge the receipt of goods but allow the buyer to sell or process the goods before payment is made to the seller.

Floor Plan

Financing method used by dealerships that allows them to have a stock of vehicles on their floors for sale; it is a type of short-term financing.

Commercial Paper

An unsecured, short-term debt instrument issued by a corporation, typically used for the financing of payroll, accounts payable, and inventories, and meeting other short-term liabilities.