1. USERS OF FINANCIAL INFORMATION
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2. USERS OF FINANCIAL INFORMATION
Shareholders (existing and potential)
Short/long term Creditors
Government/Local Authorities
Competitors
Employees
Analysts/Economists
Management
Customers
General Public
Trade Unions
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3. SHAREHOLDERS (EXISTING AND POTENTIAL)
Want to assess the performance of the company and Board
Has the value of the company risen
- Allows them to gauge if their share value has risen taken from the Balance Sheet (Net Worth)
Allows them to make further decisions about investment (buy more shares or sell) or disinvestment
Find out if they will receive a dividend this year (Net Profit from Trading, Profit and Loss Account)
Attempt to predict future returns on capital invested
Assess the performance of the management team
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4. POTENTIAL INVESTORS
Want to look at what return they may receive if they invested capital?
Will their investment be used effectively?
Will it be invested appropriately?
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5. CREDITORS – SHORT/LONG TERM
Short Term Creditors – helps them decide if credit should be granted and if they will be able to pay back future debts
Balance Sheet - Difference between Current Assets and Current Liabilities will be a good guide to whether they will have the available finance to do so
Long Term Creditors – decide whether they will lend money
Will the company be able to pay the money back plus the interest?
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6. GOVERNMENT AND LOCAL AUTHORITIES
Will be interested if the company has enough finance for future plans in the local area
If applying for grants, final accounts will allow the Local Authority to assess if the company is eligible
Government (Inland Revenue) will use the Trading, Profit and Loss account to calculate Corporate Tax from their Net Profit
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7. COMPETITORS
Look at information to see if the company’s future plans conflict with theirs
Look at how the company has performed and if it has increased its market share
Compare performance – Net Profit, Gross Profit – Trading Profit and Loss
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8. EMPLOYEES AND TRADE UNIONS
Want to know how successful the company is
May be linked to wage claims – can the company afford to increase wages
May want to look at shareholders dividends (Balance Sheet) as a guide to how successful the company is doing
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9. ANALYSTS/ECONOMISTS Use as a basis for research
Use to compile statistical records
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10. MANAGEMENT Evaluate their past performance
Results from this evaluation are plans and predictions for future performance
Attempt to control the future performance of the business through past experience
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11. MANAGEMENT Allows them to make decisions to improve the situation
Trading Profit and Loss
Let them know if firm is
making a profit
Are expenses too high
Selling Price too high or low
Cost of materials too high
Balance Sheet
Can the company pay back their debts with short term finance (working capital)
Value of fixed assets – can they be sold to raise further finance
Liabilities – are there too many debts?
May need to look at strategies to reduce them
Allows them to make decisions to improve the situation
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12. CUSTOMERS/GENERAL PUBLIC
To assess if the company will be viable in the future
What affect does the company have on the environment
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