Read the following information and answer the question.

"If we examine the balance sheets of the past five years, it reveals that the amount of loans taken by the company against fixed assets has consistently increased, resulting in poor financial health of the company this year." - Financial report of Company B.

Which of the following can be logically inferred from the statement in the financial report of Company B?

1. Reducing the amount of loans against fixed assets will enhance the financial health of Company B.
2. The value of fixed assets of Company B has declined due to taking loans against them.
3. Analyzing the balance sheets of a company provides insight into its financial health.
4. Company B did not take any loans in any financial year other than the mentioned five years.

Question

Read the following information and answer the question.

"If we examine the balance sheets of the past five years, it reveals that the amount of loans taken by the company against fixed assets has consistently increased, resulting in poor financial health of the company this year." - Financial report of Company B.

Which of the following can be logically inferred from the statement in the financial report of Company B?

1. Reducing the amount of loans against fixed assets will enhance the financial health of Company B.
2. The value of fixed assets of Company B has declined due to taking loans against them.
3. Analyzing the balance sheets of a company provides insight into its financial health.
4. Company B did not take any loans in any financial year other than the mentioned five years.

Accepted Answer

**Solution:**

1. The statement mentions that the loans taken against fixed assets have increased over five years, leading to poor financial health this year. This implies that if the company reduces such loans, its financial health could improve. Hence, inference 1 is valid.

2. The statement does not mention any decrease in the value of fixed assets due to loans; it only states an increase in loans against those assets. Therefore, inference 2 is not supported.

3. Since the conclusion is drawn by analyzing the balance sheets over five years, it confirms that examining balance sheets sheds light on a company's financial health. Thus, inference 3 is correct.

4. There is no information about loans taken outside the five-year period, so inference 4 cannot be concluded.

**Answer:** Both 1 and 3

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