Business Accounts and Users of Financial Statements Research Paper

Business Accounts and Users of Financial Statements - Research Paper ExampleThis paper tells that each of the usersof fiscal statements has different needs and interest in financial information. First, investors lead financial information to assist in making investment decisions. Before putting their resources for investment purposes, investors have to evaluate the performance of firms to establish whether the line of reasoninges can modify them to earn their required rate of return (Fess & Warren 1993). This would help them make an investment decision and de marchesine what enumerate to invest in a firm. Shargonholders are in like manner interested in the financial performance of the firm as it determines the dividends they leave alone receive and the worth of their investment. Firms with good financial performance well bequeath have good share prices and shareholders will need this financial information to determine whether to sell their shares or buy more shares (Nikolai, B azley, & Jones 2009). Lenders are the second users of financial information. Lenders are either individuals or financial institutions that offer loans to firms that are need of funds. Before making their lending decision in terms of whether to lend and what amount to give to firms. They have to look at the financial performance to determine the risk of their money. The lenders will be interested in the performance of the firm indoors the duration of their loan (Fess & Warren 1993). In addition, the employees and their unions are also interested parties of a firms financial statement. Employees put their efforts in ensuring that the firm achieves their objectives and and so need feedback on their performance. They also require the financial statements as a basis for bargaining for their increment in remuneration and other benefits like retirement.The employees also need financial information to help in the formulation of new strategies that are meant for improving the performance o f the organization. Financial information as well is needful by the employees to determine the organization continued existence for job security purposes. Creditors and suppliers are also interested in the financial information to determine the world power of the business to pay their owing debt as they fall due. This group is interested in the short term liquidity of the business rather than the long term performance (Deloitte 2011). Firms with good financial performance will have reliable creditors. Moreover, customers are also interested in the financial performance of the business in cases where they are interested in long term relationship with the business. Customers who depend solely on the business for their products will need to require surety of the business continued existence. Notwithstanding, the government authorities be it federal or state need the financial information for regulatory purposes. The security exchange authority will need financial information to deter mine the policies and to determine the national income of the country (Deloitte 2011). They also require financial performance as a way of find out the soundness of the capital markets. The popular may also be interested in the financial performance especially to businesses that affect the general public good. The public closely monitors businesses that are major employers or contribute substantially to the economy (Kravitz 1999).