Which document is usually requested by potential lenders to assess credit limits?

The balance sheet is typically the document that potential lenders request to assess credit limits because it provides a snapshot of a company's financial position at a specific point in time. It details the assets, liabilities, and equity of a business, giving lenders insight into what the company owns and owes. This information is crucial for evaluating the company's ability to meet its financial obligations and manage debt effectively.

Lenders focus on the balance sheet to determine the company's net worth and the ratio of debt to equity, which helps them assess the risk involved in extending credit. Stronger assets relative to liabilities indicate a more stable financial position, making it more likely for lenders to grant credit.

While other financial documents like the statement of cash flows and income statement give important insights about a company's financial performance and operational efficiency, they do not provide the same level of insight into the overall financial health and creditworthiness as the balance sheet does. Therefore, lenders prioritize the balance sheet when assessing credit limits.