Which items are fundamental to evaluating a company's creditworthiness?

• A. All of the above
• B. Balance sheet
• C. Income statement
• D. Cash flow

Answer: (A)

Assessing creditworthiness requires a complete view of a company's financial position and performance. The balance sheet shows what the company owns and owes at a point in time, informing you about leverage and solvency. The income statement reveals profitability and earnings power over a period, which affects the ability to generate profits to service debt. The cash flow statement shows the actual cash generated and used, highlighting liquidity and how well operating cash flow covers debt payments. Because each document focuses on a different dimension, you need all three to form a reliable view; together they support important ratios like debt-to-equity, current and quick ratios, and interest coverage. Therefore, all of the above are fundamental to evaluating creditworthiness.