You are a creditor of Mercy Hospital. You are told to focus on only one of the f

Question

You are a creditor of Mercy Hospital. You are told to focus on only one of the following sections of the balance sheets and income statement: current assets, long-term assets, revenue, expenses, and net assets. Which one would you focus on?

a. revenue - the creditor wants to make sure it is doing business with a company which has sufficient revenues to pay its expenses.

b. expenses - this tells the creditor about the ability of the company to pay off bills.

c. current assets - of teh alternatives, this would be a major area of concern for a creditor because it measures the company's ability to pay its short-term liabilites.

d. net assets - this shows what current assets are available to pay additional debt after current liabilities are paid off.

Explanation / Answer

d. net assets - this shows what current assets are available to pay additional debt after current liabilities are paid off.

Thanks

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