Question

State the nature of accounting information required by long term lenders

Answer 1

1) Repaying capacity of the business
2) Profitability
3) Liquidity
4) Operational efficiency
5) Potential growth of business

Answer 2

Answer:

The first concern of long term lenders is the safety of their investment. They look accounting information for the finding out the following:

The long term financial stability of the business

Income generation of the business

Nature of business

Reputation and skill of management

Strengths, weaknesses, opportunities and threats of business.

The long term lenders should be able to draw the above information from the accounting reports of the business

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