Investors and potential investors
The present investors want to decide whether they should hold the securities of the company or sell them. Potential investors, on the other hand, want to know whether they should invest in the shares of the company or not. Investors (Shareholders or owners) and potential investors, thus, make use of the financial statements to judge the present and future earning capacity of the business, to judge the operational efficiency of the business and to know the safety of investment and growth prospects.
Lenders/long term creditors
Financial statement helps lenders such as debenture holders, suppliers of loans and leases in ascertaining the long term and short term solvency of the business. They like to know the financial soundness of the business i.e. the ability of the business to repay debt on maturity and whether the enterprise earns sufficient profits so as to pay interest regularly.
Financial statement helps lenders such as debenture holders, suppliers of loans and leases in ascertaining the long term and short term solvency of the business. They like to know the financial soundness of the business i.e. the ability of the business to repay debt on maturity and whether the enterprise earns sufficient profits so as to pay interest regularly.
Management
Analysis of financial statements enable the management to evaluate the overall efficieny of the firm. It helps to ascertain the solvency of the enterprise; to know about its viability as a going concern and to provide adequate information for planning and controlling the affairs of the business. Future forecasts can easily be made by analyzing the past date.
Analysis of financial statements enable the management to evaluate the overall efficieny of the firm. It helps to ascertain the solvency of the enterprise; to know about its viability as a going concern and to provide adequate information for planning and controlling the affairs of the business. Future forecasts can easily be made by analyzing the past date.
Suppliers/short term creditors
Creditors/suppliers supplying goods to a business are interested to know as to whether the business would be in a position to pay the amounts on time. They are interested in short-term solvency i.e. the liquidity of the business. They are more interested in current assets and current liabilities of the business. If current assets are sufficient, say, twice the current liabilities, they are satisfied that the business would be able to discharge the short-term debts on time.
Creditors/suppliers supplying goods to a business are interested to know as to whether the business would be in a position to pay the amounts on time. They are interested in short-term solvency i.e. the liquidity of the business. They are more interested in current assets and current liabilities of the business. If current assets are sufficient, say, twice the current liabilities, they are satisfied that the business would be able to discharge the short-term debts on time.
Employees and Trade Unions
Employees are interested in better emoluments, bonus and continuance of business and whether the dues like provident fund, ESI et., have been deposited with the authorities. They would therefore, like to know its financial performance and profitability and operating sustainability.
Government and its agencies
Financial statements are used by government and its agencies to formulate policies to regulate the activities of business, to formulate taxation policies, to compile national income accounts. Taxation authorities such as income tax department use the financial statements for determination of income tax; sales tax department is interested in sales while the excise department is interested in production.
Employees are interested in better emoluments, bonus and continuance of business and whether the dues like provident fund, ESI et., have been deposited with the authorities. They would therefore, like to know its financial performance and profitability and operating sustainability.
Government and its agencies
Financial statements are used by government and its agencies to formulate policies to regulate the activities of business, to formulate taxation policies, to compile national income accounts. Taxation authorities such as income tax department use the financial statements for determination of income tax; sales tax department is interested in sales while the excise department is interested in production.
Stock exchange
Stock exchange uses the financial statements to analyze and thereafter, inform its members about the performance, financial health, etc. of the company, to see whether financial statements prepared are in conformity with the specified laws and rules and to see whether they safeguard the interest of various concerned agencies. Other Regulatory authorities (such as, Company Law Board, SEBI, Stock Exchanges, Tax Authorities etc.) would like that the financial statements prepared are in conformity with the specified laws and rules, and are to safeguard the interest of various concerned agencies. For example, taxation authorities would be interested in ensuring proper assessment of tax liability of the enterprise as per the laws in force from time to time.
Stock exchange uses the financial statements to analyze and thereafter, inform its members about the performance, financial health, etc. of the company, to see whether financial statements prepared are in conformity with the specified laws and rules and to see whether they safeguard the interest of various concerned agencies. Other Regulatory authorities (such as, Company Law Board, SEBI, Stock Exchanges, Tax Authorities etc.) would like that the financial statements prepared are in conformity with the specified laws and rules, and are to safeguard the interest of various concerned agencies. For example, taxation authorities would be interested in ensuring proper assessment of tax liability of the enterprise as per the laws in force from time to time.
Customers
Customers are interested to ascertain continuance of an enterprise. For example, an enterprise may be supplier of a particular type of consumer goods and in case it appears that the enterprise may not continue for a long time, the customer has to find an alternate source.
Customers are interested to ascertain continuance of an enterprise. For example, an enterprise may be supplier of a particular type of consumer goods and in case it appears that the enterprise may not continue for a long time, the customer has to find an alternate source.
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