Question

What is an investor's objective in financial statement analysis?

(a) To decide whether the borrower has the ability to repay interest and principal on borrowed funds.
(b) To determine if the firm would be a good place to obtain employment.
(c) To determine the company's taxes for the current year.
(d) To determine whether an investment is warranted by estimating a company's future earnings stream.

Answer 1

An investor's objective in financial statement analysis is to determine whether an investment is warranted by estimating a company's future earnings stream.

Step-by-step explanation:

The objective of an investor in financial statement analysis is to determine whether an investment is warranted by estimating a company's future earnings stream.

Investors analyze financial statements to evaluate the financial health and performance of a company. They assess factors like profitability, liquidity, and solvency to determine the potential returns and risks associated with investing in the company.

By analyzing financial statements, investors can make informed decisions about whether to invest in a company or not.