04 End users of financial statements

FINANCIAL STATEMENT

END-USERS OF FINANCIAL STATEMENTS

1. Management of the company

1. First user of financial statements
2. need to consider financial statements while considering the growth and progress of the company
3. liquidity, profit earning capacity, cash flow, fund requirement , cash balance

2. Investors

1. investors would like to know and keep updated on the company’s financial performance
2. they decide whether to keep their money invested

3. Clients

1. big clients would like to deal with financially stable company
2. stable company can give discounts and credit sales

4. Competitors

1. competitors like to know financial status of company
2. other company’s financial health
3. change / update their strategy

5. The government ad govt agencies

1. GST department
2. Income tax department
3. to check if company paid proper taxes

6. Employees

1. They are also users
2. they’d like to know ho a company is doing
3. company may decide to involve employees in decision making

7. Investment analysts

1. share brokers
2. Have industry knowledge about how a company is performing
3. go through financial statements and based on the performance whether to recommend the stocks of the company or not

8. Lenders

1. Traditional banks, financial institutions , creditors
2. check the company’s ability to pay back debts / loans
3. go through fin. statements before providing loan

9. rating agencies

1. credit rating agencies review financial statements to give credit rating to debt instrument of company

10. suppliers / vendors

1. provide raw material
2. would like to deal with companies with good financial standing
3. make decisions to provide goods on credit to company