Accountancy Part BAnalysis of Financial Statements

Which of the following users is interested in knowing borrowing capac…

Which of the following users is interested in knowing borrowing capacity of the organisation at the time of analysis?

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Bankers and lenders

Bankers and lenders decide whether to give a loan and how much. They study the firm’s long-term solvency, its ability to generate cash, pay interest and repay the principal – that is, its borrowing capacity.

Option (1) Employees and Trade Union — Incorrect. They look at whether the firm can afford a wage increase.

Option (3) Researchers — Incorrect. They study the statements for business and economic conditions.

Option (4) Competitors — Incorrect. They compare performance; they do not lend to the firm.

NCERT (2026-27 edition):
Lenders – “… Suppliers of long-term debt are concerned with the firm’s long-term solvency and survival. They analyse the firm’s profitability over a period of time, its ability to generate cash, to be able to pay interest and repay the principal and the relationship between various sources of funds (capital structure relationships). Long-term lenders analyse the historical financial statements to assess its future solvency and profitability.”