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What are three items on a companies balance sheet that would be important to an investor?...

What are three items on a companies balance sheet that would be important to an investor? Justify your answer.

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Expert Solution

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.


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