Financial Statements

One external source of credit information is the published financial state merits. that is. the balance sheet and the profit and loss account. The financial statements contain verv useful information They throw light on an applicant’s financial liquiditv. profitability and debt capacity. Although the financial statements do not directly reveal the part payment record of the applicant. they art helpful in the overall financial position of a firm, significantly determines its standing.

Bank References

Another useful source of credit information is the bank of the finn which contemplating the extension of credit. The modus operandi here is that the firm’s hanker coli tbe necessary information from tht.’ applicant’s banks. Alternatively, the applicant may be required to ask his banker 10 provide the necessary infonnation either directly to the firm or to its hank.

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