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how is the assessment ofa companys financial information by a potential stockholder is different from the assessment of a potential creditor?
Discuss how the assessment of a company’s financial information by a potential stockholder would differ from the assessment of a potential creditor
1 Answer
- GA41Lv 71 month agoFavourite answer
An investor would be interested in the companies growth potential in terms of earnings and revenue. They may be interested in the periodic dividend payment. They would possibly be interested in the PE ratio in comparison to other companies in the sector. There primary interest would be in the dividends and potential for the stock to appreciate in value.
A creditor might be interested in the companies tangible asset values and book values. They would be interested in working capital (current assets minus current liabilities). They would be very interested in how many times earnings exceeds the interest payments on the loans. They would be interested in long-term debt to equity ratio's. They would also be interested in the companies credit rating. Their primary interest would be whether the company could meet its debt obligations.