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In: Accounting

You are a business owner and your business is growing but you believe it is not...

You are a business owner and your business is growing but you believe it is not growing fast enough and you need an infusion of capital to help speed up the growth. You have a friend who is willing to loan you the capital needed but he wants to make sure that you are able to pay the loan back (plus interest) and he needs some proof that you can deliver. What financial statements are you likely to furnish to your lender and why.

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Expert Solution

As the lender of money needs to know about the financial performance of business, he will have to see the profit and loss account ie, income statement.
Income statement is one of the statement which shows the revenue and expences of a company during a particular period. It shows how the revenues turn into net income or net profit.
The purpose of income statement is to show the stake holders of the company whether the company made profit or is it in a loss during the period being reported.
Income statements will help investors and creditors determine the past financial performance of the enterprise, predict the future performance, and assess the capability of generating future cash flows using the report of income and expenses.
This is why i recommend my friend to see my income statement.as he will be in confindence that he will get his money back with interest.

ekkarill92 answered 2 years ago
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