Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Analysis of Financial Statements

Question:
The creditors are interested in Financial Statement analysis to know which of the following?
Options:
Liquidity
Profitability
Share capital
All of the above
Correct Answer:
Liquidity
Explanation:
Trade payables (creditors) are particularly interested in the firm’s ability to meet their claims over a very short period of time. Their analysis will, therefore, evaluate the firm’s liquidity position.