Potential Shareholders and Lenders Are Interested in a Company's Financial

question 83

Essay

Potential shareholders and lenders are interested in a company's financial statements.Several financial statement items appear below.Answer the questions that follow.
$\begin{array}{lll}\text { Accounts receivable } & \text { Accounts payable } & \text { Advertising expense } \\\text { Cash } & \text { Depreciation expense } & \text { Income taxes } \\\text { Common shares } & \text { Land held for future expansion } & \text { Dividends } \\\text { Retained earnings } & \text { Loss on the sale of equipment } & \text { Service revenue } \\\text { Office supplies } & \text { Patent amortization expense } & \text { Sales } \\\text { Jnearned revenue } & \text { Utilities expense } &\end{array}$

A) In which two items fram above wauld shareholders be most interested? Explan why the two you selected are important to shareholders.

B) In which item would lenders be most interested? Exglain why this item is important.

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Definitions:

Disposable Income

Income remaining after deduction of taxes and social security charges, available to be spent or saved as one wishes.

Consumption Spending

The total money spent by households in an economy on goods and services.

Marginal Propensity

The fraction of an additional unit of income that is spent on consumption rather than being saved.