Option 1 To assess its future solvency Option 2 To assess its future profitability Suppliers of long-term debt are concerned with the firm’s longterm 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. |