Who are the basic users of financial statements and how do they use them?

Examples of internal users are owners, managers, and employees. External users are people outside the business entity (organization) who use accounting information. Examples of external users are suppliers, banks, customers, investors, potential investors, and tax authorities.

How do the users use the financial statements?

Customers. They use Financial Statements to assess whether a supplier has the resources to ensure the steady supply of goods in the future. This is especially vital where a customer is dependent on a supplier for a specialized component.

Who would be interested in financial statements?

The main users (stakeholders) of financial statements are commonly grouped as follows: Investors and potential investors are interested in their potential profits and the security of their investment. Future profits may be estimated from the target company’s past performance as shown in the income statement.

What do customers look for in financial statements?

Customers need to view the financial statements of the company from which they are procuring goods or services. Financial statements provide assessment of a company’s profitability, liquidity and operational efficiency. As a result, there are a number of reasons why managers analyze financial statements.

Who are the basic users of financial statements?

Who are the Users of Financial Statements?

• Company management.
• Competitors.
• Customers.
• Employees.
• Governments.
• Investment analysts.
• Investors.
• Lenders.

Who are the users of audited financial statements?

Why do employees look at financial statements?

The reason it says, is: “to provide information about the financial position, performance and financial adaptability of an enterprise, that is useful to a wide range of users for assessing the stewardship of management and for making economic decisions”.

What is financing activity in cash flow statement?

The financing activity in the cash flow statement focuses on how a firm raises capital and pays it back to investors through capital markets. These activities also include paying cash dividends, adding or changing loans, or issuing and selling more stock.

Who are the users of financial statements Why do they need financial statements?

The financial statements are used by investors, market analysts, and creditors to evaluate a company’s financial health and earnings potential. The three major financial statement reports are the balance sheet, income statement, and statement of cash flows.