Asked by kamlesh prajapati on Jul 02, 2024
Verified
The statement of cash flows is an important source of information when analyzing a company's credit risk.
Statement of Cash Flows
A financial report that provides a summary of an entity's cash inflows and outflows over a period, categorizing them into operating, investing, and financing activities.
Credit Risk
The risk of loss resulting from a borrower's failure to repay a loan or meet contractual obligations.
- Understand the use of financial statements, especially the statement of cash flows, in assessing a company's credit risk and financial health.
Verified Answer
SG
Sarah Ghura6 days ago
Final Answer :
True
Explanation :
The statement of cash flows provides information about a company's inflows and outflows of cash, which can be useful in assessing its ability to generate sufficient cash flow to pay debts and meet its financial obligations. Therefore, it is an important factor to consider when evaluating a company's creditworthiness.
Learning Objectives
- Understand the use of financial statements, especially the statement of cash flows, in assessing a company's credit risk and financial health.
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