Asked by Maryana Bilska on Jun 24, 2024
Verified
Long-term creditors are usually most interested in evaluating
A) liquidity and profitability.
B) comparability and profitability.
C) profitability and solvency.
D) consistency and solvency.
Liquidity
The ability of an asset to be converted into cash quickly without significantly affecting its price.
Solvency
The ability of a company to meet its long-term financial commitments and continue its operations.
Profitability
The ability of a company to generate earnings as compared to its expenses and other relevant costs incurred during a specific period.
- Understand the ratio of debt to total assets as a measure of a company’s financial stability.
Verified Answer
SM
Sharo MaldonadoJun 26, 2024
Final Answer :
C
Explanation :
Long-term creditors are primarily interested in a company's profitability and solvency because these factors indicate the company's ability to generate profits over time and its capacity to meet long-term obligations, respectively.
Learning Objectives
- Understand the ratio of debt to total assets as a measure of a company’s financial stability.