In: Finance
What are three items on a companies balance sheet that would be important to an investor? Justify your answer.
Three items on a companies balance sheet important for an
investor are:
1.The amount of long term debt in the company because in case of
liquidation debt holders are paid out first. It also helps to
identify the leverage ratio and risk in the firm
2. The amount of equity and paid up capital in the firm. This helps
in identifying the cash which is for the equity holders or
investors.An all equity firm has very low risk and can absorb
shocks during recession.
3.Current assets and liabilities is important because it provides
the liquidity position of the firm.If the liquidity position is
good the the firm can pay off its short liabilities for continued
and smooth running of operations of the company.