Chapter 4, Problem 4SP

To determine

Answer the given question for person K.

1. a. Explain the type of information provided by Company S’s financial statements to person K.
2. b. List the financial statements that would evaluate whether Company S is having enough cash to meet its current liabilities or not. Explain the kind of information that helps person K.
3. c. List the financial statements that would evaluate whether Company S will survive in the long run or not. Explain the kind of information that helps person K.
4. d. List the financial statements that helps person K to evaluate Company S’s profitability. Explain the kind of information that helps person K.
5. e. Disclose that the person K will find out whether Company S has outstanding debt or not and explain the way that the person K can determine whether Company S will be able to meet its interest and principle payments on any debts that it has.
6. f. Explain the way that the person K could determine whether Company S pays a dividend or not.
7. g.  Explain that there are any other areas of concern that person K should be aware of before making any decision to go ahead or not.