Question

Creditors or suppliers are interested to know the ______.

पर्याय

• Profitability of the firm in relation to turnover.

• Profitability of the firm in relation to investments.

• Short-term solvency/liquidity of the concern.

• Effective utilisation of its (firm’s) resources.

Answer 1

Creditors or suppliers are interested to know the short-term solvency/liquidity of the concern.

Explanation:

Creditors and suppliers provide goods or services to a company on credit. Therefore, their primary concern is whether the company has enough liquid cash or short-term assets to pay back its short-term debts on time. They evaluate the company’s short-term solvency and liquidity (using metrics like the current ratio and Quick Ratio) to ensure their money is safe and will be recovered within the operating cycle.