Users of Financial Statement

Different users as per information needs:

a. Investors –  the provider of risks capital and their advisers are concern with inherent risk and return of their investment. They need information to determine whether they should buy or sell, hold or sell and assess the ability of enterprise to pay dividends.

b. Employees – as well as representative groups need information about the stability and profitability of their employers. They need information that will enable them to assess the ability of enterprise to provide remuneration, retirement benefits and employment opportunities. 

c. Lenders-  are interested in the information that enables them to determine whether their loans, and interest attaching to them will be paid when due.

d. Suppliers and other trade creditors –  interested information that enable them to determine whether the amounts owing to them will be paid when due. Trade creditors are likely to be interested in an enterprise over a shorter period of time than lenders unless they are dependent upon the continuation of the enterprise as a major customer.

e. Customers –  needs information that enables them to know about the continuance of enterprise especially when they have long term involvement or dependent on enterprise.

f. Government and their agencies –  are interested in the allocation of resources and activities of the enterprise . They require information to regulate the activities and determine taxation policies and as the basis of national income and similar statistics.

g.  Public – enterprises affect the members of the public in a variety of ways. To determine the trends and development in the prosperity of the enterprise and the rank of it’s activities.

The basic Financial statements are designed to meet common needs of all users.

Responsibility: The Management of an Enterprise has the Primary Responsibility for the preparation and presentation of the financial statements of the enterprise.



About Jonathan Ruiz CPA

Entrepreneur, CPA Mentor, Stock market Newbie Mentor, Influential Author and Master's Degree in International Business graduate in Hult International Business School, UK. A father of two lovely daughters.
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