While accountants focus on creating financial statements, finance professionals use these statements to evaluate a firm and answer questions about its performance. Several potential questions are listed in the table below. Identify which financial statement would help answer each question.
Is the firm financed with too much debt?
Balance Sheet or Income Statement?
How profitable has the firm been?
Balance Sheet or Income Statement?
Can the firm meet all its short-term obligations?
Balance Sheet or Income Statement?
Does the company generate enough earnings from its operations to pay its required annual interest payments?
Balance Sheet or Income Statement?