Users Who Will Benefit from Financial Statements Essay
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The users of Financial Statements need them in order to satisfy some of their different needs for information. The following are the users and the ways in which they use this information in their decision making.
Investors They are the providers of Capital for the entity. They require information in order to determine whether they should buy hold or sell. Shareholders are also interested in information which enables them to assess the ability of the entity to pay dividends.
Employees They are interested in the information since they need to know about the stability and profitability of their employers.
They are also interested in information which provides remuneration, retirement benefits and employment opportunities.
Lenders Are interested in information that enable them to determine whether their loans and interest attached to them will be paid when due.
Suppliers and other Creditors They require information in determining whether the amounts due to them will be paid when due. Trade creditors are likely to be interested in information an entity over a shorter period than lenders unless they are dependent upon the continuation of the entity as a major customer.
Government and its agencies They are interested in allocation of resources, and therefore, the activities of entities. They also require information in order to regulate the activities of entities, determine taxation policies and as the basis for National income and similar statistics.
Public Entities make a substantial contribution to the local economy in many ways including the number of people they employ and their patronage of local suppliers. Financial Statements may assist the public by providing information about the trends and recent developments in the prosperity of the entity and range of its activities.