The Use of Financial Statements by Investors, Creditors, and Managers

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Investors, Creditors and Managers use of Financial Statements Introduction Annual accounts are produced by all listed companies. The production of the annual accounts is compulsory requirement, and a primary source of information for many stakeholders who have an interest in the performance of a firm. Within the annual accounts are a number of financial statements giving information about the different financial aspects of the firm. The three main financial statements are the income statement, balance sheet and cash flow statement (Kimmel et al., 2011). In addition to these three main statements there is also the statement of the share shareholders equity and the retrained earnings statement (Kimmel et al., 2011). The information provided by the different statements is interlinked: however, for different stakeholders there may be propensity to focus on certain accounts. Three of the primary stakeholder groups for firm are the investors, the creditors and the management. Looking at the different needs of these stakeholder groups it is possible to assess which of the financial statements will be of the greatest importance to those groups. Investors The investors are the shareholders or stockholders, and are defined as the primary users of the annual accounts (Elliott and Elliott, 2011). The investors will purchase shares or make an investment with the aim of making a profit, usually be sharing the profits made from the operations of the company (Kimmel et al,
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