FINANCIAL STATEMENTS: WHO USES THEM AND WHY



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Here is a brief list of who uses financial statements and why. This list gives only a few examples and is by no means complete.

1. Existing equity investors and lenders, to monitor their investments and to evaluate the performance of management.

2. Prospective equity investors and lenders, to decide whether or not to invest.

3. Investment analysts, money managers, and stockbrokers, to make buy/sell/hold recommendations to their clients.

4. Rating agencies (such as Moody’s, Standard & Poor’s, and Dun & Bradstreet), to assign credit ratings.

These Topics Are Also In Your Syllabus
1 WHAT ARE FINANCIAL STATEMENTS? A CASE STUDY link
2 POINTS TO REMEMBER ABOUT FINANCIAL STATEMENTS link
You May Find Something Very Interesting Here. link
3 FINANCIAL STATEMENTS: WHO USES THEM AND WHY link
4 FINANCIAL STATEMENT FORMAT link
5 HOW TO ANALYZE FINANCIAL STATEMENTS link

5. Major customers and suppliers, to evaluate the financial strength and staying power of the company as a dependable resource for their business.

6. Labor unions, to gauge how much of a pay increase a company is able to afford in upcoming labor negotiations.

7. Boards of directors, to review the performance of management.

8. Management, to assess its own performance.

9. Corporate raiders, to seek hidden value in companies with underpriced stock.

These Topics Are Also In Your Syllabus
1 NONRECURRING ITEMS IN THE INCOME STATEMENT link
2 NONRECURRING ITEMS IN THE STATEMENT OF CASH FLOWS link
You May Find Something Very Interesting Here. link
3 NONRECURRING ITEMS IN THE INVENTORY DISCLOSURES OF LIFO FIRMS link
4 NONRECURRING ITEMS IN THE INCOME TAX NOTE link
5 Types Of Systems link

10. Competitors, to benchmark their own financial results.

11. Potential competitors, to assess how profitable it may be to enter an industry.

12. Government agencies responsible for taxing, regulating, or investigating the company.

13. Politicians, lobbyists, issue groups, consumer advocates, environmentalists, think tanks, foundations, media reporters, and others who are supporting or opposing any particular public issue the company’s actions affect.

14. Actual or potential joint venture partners, franchisors or franchisees, and other business interests who need to know about the company and its financial situation.

These Topics Are Also In Your Syllabus
1 THE PROCESS OF IDENTIFYING NONRECURRING ITEMS link
2 NONRECURRING ITEMS IN THE INCOME STATEMENT link
You May Find Something Very Interesting Here. link
3 NONRECURRING ITEMS IN THE STATEMENT OF CASH FLOWS link
4 NONRECURRING ITEMS IN THE INVENTORY DISCLOSURES OF LIFO FIRMS link
5 Types Of Systems link

This brief list shows how many people and institutions use financial statements for a large variety of business purposes and suggests how essential the ability to understand and analyze financial statements is to success in the business world.


Rating - 3/5
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Rating - 3/5