Internal And External Stakeholder Groups Using Financial Statements Essay

Financial statements (also known as pro-forma statements) have a forecast balance sheet, income statement and statement of cash flows. Financial statements are used to summarize the different events projected for the future. They are very important in the planning process. The balance sheet is what this research is concerned about. Financial statements are evaluated for performance, for example organizations with multiple divisions compare the performance of the divisions using financial statements. Secondly they help plan for the future.

The main purpose of the financial statements is to provide creditors and investors with a summary of a business financial activity. All statements are prepared at certain times throughout the year. The balance sheet reports liabilities, assets, and owner equity of the company. The income statement matches incurred expenses during a period of generated revenue. The statement of retained earnings reports retained earnings from net loss and net incomes from

The information found in financial statements outlines the financial activities of that company, and can help managers, creditors, and investors make many important decisions.

External users (shareholders, lenders, directors, customers, suppliers, regulators, lawyers, brokers, and the press) rely on financial statement analysis to make decisions in pursuing their own goals.

The objective of financial statements is to provide information about the financial strength, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions ("The Framework for the Preparation and Presentation of Financial Statements").

The information reflected in the financial statements actually is expected to be of high quality and useful to support the quality decision-making of market stakeholders due to the far-reaching and very costly consequences. It is important in this context to properly identify and discuss the user needs and thereby we refer to the actual requirements of all information users amongst them the management, which uses the financial information to steer, regulate and co-ordinate the business.

The use of financial statements is to provide individuals, but not a specific group with compressed financial data showing them the information that pertains to the decision they want to make. They are also able to see past performance of their company and comparing corporation that is in the same industry (Edmonds, Tsay, & Olds, 2011).

Financial statements of the company are significant for the investors who would like to venture into the business operation. It gives them the insight whether the business is making profits or it is doomed to fail;

Accounting is the heart and soul of executing a successful business. Accounting is used to provide record for all items that are paid and received for a business over any period of time. Within the purpose of accounting lies the need to provide continuity and sustainability within a business, without it a business will not thrive. The information obtained is kept on record, in order to give insight to upper management on data concerning the daily revenue and expenses of that business. This data is needed to not only inform the employees of the business, but also the investing parties of that business as well. Success in business is equated to being accountable of all aspects of revenue and expenses. To

Financial statements are a very useful tool for individuals interested in the organization. Investors use the information to determine if it a wise decision to put their money into the organization. Investors need to determine if the organization has been successful and profitable and will continue to be successful and profitable. Creditors use the financial statements to determine the amount of credit that should be advanced to the organization. Employees generally do not look at the financial statements, but if a new executive was thinking of joining the organization, he or she may want to see the potential of the organization to make sure the investors are becoming a part of a successful organization. Management uses the financial statements on a monthly basis to determine which areas of the organization are profitable and which areas of the organization that needs to be discontinued or restructure to become more profitable.

Financial accounting reports, to include balance sheets and income statements provide accountants and the general public a snap shot of a company’s overall financial condition and possibly their future financial position. This financial information is very important to business owners, executive managers, private investors and employees. The information contained in a company’s financial report has several important uses. Managers and senior leaders of a business can take extrapolated financial data from the income statement which details monthly earnings as well as the company’s liabilities and equity position. This information can then be used to analyze and forecast future annual budgets. Additionally information obtained in these multiple types of reports can also be used to proactively predict trends that may have a negative financial impact on company’s future operations. On another note a company’s financial reports are used by lending institutions to determine their ability to receive and repay loans used to finance business operations.

Each quarter we are responsible for an extensive overview of our financial records and we submit those to an outside accounting service to ensure there is no room for error. These reports are then constructed and submitted to our company stakeholders and Wall Street. Organizations that are under pressure to present positive financial results to shareholders, parent companies, banks, creditors and other key stakeholders

have explained that the Financial statements provide asummarized view of the financial position and operations of a firm. Therefore, much can belearnt about a firm from a careful examination of its financial statements as invaluabledocuments / performance reports. The analysis of financial statements is, thus, an important aidto financial analysis.

Financial statements, also known as financial reports, record the financial activities of a business in short and long term. The four financial statements are: balance sheet, income statement, statement of retained earnings, and statement of cash flows. A balance sheet reports the assets, liabilities, and net equity on a company. An income statement reports income, expenses, and profits on a company. A statement of retained earnings shows a company 's changed retained earnings. The statement of cash flows shows a company 's cash flow activities, such as operating investing, and financing activities (“Financial statements”, 2007, para.1). Financial statements are very important to a company.

A company prepares financial statement to provide information about its financial position and performance. This information is in turn used by a wide range of stakeholders (such as investors, banks, customers, suppliers etc) in making economic decisions with respect to respective economic interest in the company. Typically, in terms of ownership by investment in shares of the company, shareholders though own the company but do not manage it. Therefore, the shareholder and other such stakeholders to get comfort in taking sound decision need independent assurance from the auditors that the financial statements reflect true and fair view of the company affairs in all material respects. Hence, in order to enhance the level of