A bond, in general, is basically an IOU. One is required to obtain a bond when working with the Federal Government, a corporation or individual states. The reason one invests in a bond is that they are more conservative than the stock market and, more importantly, the bond is going to pay more than a cash investment.
A Financial Bond is a non-cancellable indemnity bond that assures that a payment will be paid, if at some future date, the principal does not perform the contractual obligations specified.
Here are the list of things that a surety might ask while evaluating a bond application:
A Commercial Bond Application: An application which sums up a thorough overview of the principal’s financial situation.
Business Financial Statements: A formal record of the financial activities of an entity. These statements evaluate the financial strength, performance and liquidity of a company. The statements should include assets, liabilities, equity, income and cash flow statements.