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    student007's Avatar
    student007 Posts: 60, Reputation: 2
    Junior Member
    		  
    #1

    Mar 1, 2006, 08:38 AM
    User objectives
    Let's say I just took a huge loan from a bank, and I determined they were my most important user. When making my financial statements, I choose to maximize income (within the limits of GAAP). Why would this serve to be useful if I show these statements to the bank?
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Mar 1, 2006, 08:42 PM
    Because when a bank or anyone loans you money, they are taking a risk.

    They want to see that you are in fact making money and are able to pay them back. So, if you are making a huge net income, they think you are doing well and therefore will be happier and lease likely to bug you over your loan.

    That being said, the bank should ask for a Statement of Cash Flows as well.
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