Why is information relating to a company’s scheduled maturities of debt useful in an analysis of its financial condition? 

Why is information relating to a company’s scheduled maturities of debt useful in an analysis of its financial condition?

Excessive payments in any one year can create a cash flow problem, especially if the debt cannot be refinanced.

We prefer to see liabilities coming due in the near future if interest rates are expected to decline; but deferred if interest rates are expected to increase.

The information relating to a company’s scheduled maturities is not important.

We are looking to see if all payments are approximately equal. If so, the expected drain on cash flow will be constant.

Mark 1.00 out of 1.00

The correct answer is: Excessive payments in any one year can create a cash flow problem, especially if the debt cannot be refinanced.

 

Sharing is caring!

Have any Question or Comment?

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!