Asked Sep 7, 2019

What represents a company’s primary means of cummunicaying information to external users?


Expert Answer

Step 1

First of all, we need to understand who are external users- these are the people who are interested in company\'s information for various reasons. They may be- prospective owners, lenders, employees, customers, government and general public. Each has their own indent to use the information of the company in their decision making etc.

Step 2

A company has to communicatethe below mentioned  information to the above external users for:-

1. Owners or prospective owners- These people need to know that company is earning satisfactorily and their capital is safe. aslo, new investors needs to see if they should invest their money in the company basis its financial health.

2. Creditors- They need to know that if they lend money to the company, does it has the repay capacity or will it be able to pay debts on the due date.

3. customers- Their basic intent lies behind seeing the durabilty and longitivity of the company as they have to buy the products and hence needs the surety that all the gaurntees/warranties w...

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