Users of Financial Statements In Accounting

Users of Financial Statements Or Financial  Information Or Accounting Information

Users of financial statements are stakeholders of the company or entrepreneur. Because they are interested in the business of the company. These users need accounting information from the financial statement of the business of the company.

Financial Statements include Income Statement, Balance Sheet, Statement of Cash Flows, and Statement of Changes of Equity. Notes To The Accounts are just explanation of different Accounting Transactions of the business.

Following are the important users of financial statements:

Ø Investors

Investors are those persons who invest in the business of the company. They need Accounting Information to in order to invest in the business of the company. They need to Liquidity Position of the business as well to get the accurate financial performance and financial position of the business. After getting reliable and accurate information from the financial statements of the company, they invest in the business and buy or sell the shares of the company.

Ø Employees

Employees need information about their payroll and future prospects in their jobs in the company. If the financial performance and position of the company is good, then they will hope that they will get good reward and good position based on their performance and merit.

Ø Lenders

Lenders include Banks, Financial Institutions and other big companies that provide loans or credit to the company. They need accounting information to better know about the ability of the company to pay back the credit amount. So they need financial statements to check whether the company is in a position to repay the amount of loan or not. If The Company has sufficient amount of cash and is good in debt equity ratio and other ratios that affect the repayment of loan, then the lenders will issue credit to the company.

Ø Suppliers

Suppliers are those who provide products or services to the company. They must need accounting information about credit availability of the company so that the company repays their credit in time. Company must have sufficient cash to pay their dues on demand.

Ø Customers

Customers are those who buy products of the company. They need accounting information in order to know whether the company provides quality products or services at reasonable price or not. The can get this accounting information from Trading And Profit And Loss Account, Notes to the Accounts and other financial statements of the company.

So, it is all about Users of Financial Statements in Accounting.