Author Question: What methods do analysts use to determine the impact of debt on a company's financial situation? ... (Read 83 times)

Alygatorr01285 · **on:** Jul 5, 2018

What methods do analysts use to determine the impact of debt on a company's financial situation?

What will be an ideal response?

Question 2

The main reason that the bank statement cash balance and the company's cash balance do notinitially balance isdue to timing differences.
a. True
b. False

Indicate whether the statement is true or false

succesfull · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

Analysts use information available in the financial statements in order to analyze a company's financial situation. The total amount of debt outstanding is reported on the balance sheet. The reported debt is broken down into current liabilities, or short-term debt, and long-term liabilities. The income statement will contain information on the total amount of interest expense incurred during a reporting period. The income statement will also report the amount of income available to cover debt payments. A review of the statement of cash flows can be used to determine the amount of cash available to cover debt payments or to repay debt. In addition, the statement of cash flows reports cash received from borrowing and cash paid out to pay off liabilities. In order to get a perspective on the financial health of a company, analysts use the debt-to-equity ratio to compare the amount of debt owed to the amount of a company's shareholders' equity.

Answer to Question 2

True