Liabilities are important to creditors and investors because the company must be able to generate sufficient cash from operations or further borrowing to meet the payments required by debt agreements if a business does not pay its creditors, the law may give the creditors the right to force the sale of assets sufficient to meet their claims. The process of communicating financial accounting information to existing and potential future investors, creditors, lenders, and other external decision makers principals common equity shareholders and creditors are called.
Why might financial information be important to potential creditors investors and employees name: dinh thi quyen class: a4 – lt6b number: 24 essay: importance of financial statements to managers, investors and creditors financial statements are important reports. Financial institutions (eg banks) use financial statements to decide whether to grant a loan or credit to a business financial institutions assess the financial health of a business to determine the probability of a bad loan.
Why are assets important to the decisions of investors and creditors assets are important to investors and creditors because assets provide a basis for judging whether sufficient resources are available to operate the company. The most important benefit of financial accounting, and the benefit the financial accounting standards board, or fasb, most emphasizes, is the access to information the average lender or investor does not have ongoing inside access to the day-to-day operations of a company.
Critically evaluate financial statements in terms of its importance, reliability and relevancy to the key users response: as stated by atrill & mclaney, the financial statements objective is to provide a snapshot of the financial position and performance of a business ( atrill & mclaney, 2008. A company’s financial statements provide various financial information that investors, creditors and analysts use to evaluate a company’s financial performance much of the information presented in a financial report is required by law or by accounting standards.
Prospective investors need information to assess the company's potential for success and profitability in the same way, small business owners need financial information to determine if the business is profitable and whether to continue, improve or drop it 2 management in small businesses, management may include the owners. More specifically, investors and creditors need to know where their money went and where it is now the financial statement of balance sheet addresses such issues by providing detailed information about a company’s asset investments the balance sheet also lists a company’s outstanding debt and equity components, and so debt and equity investors can better understand their relative positions in a company’s capital mix.
Stockholders of corporations need financial information to help them make decisions on what to do with their investments (shares of stock), ie hold, sell, or buy more prospective investors need information to assess the company's potential for success and profitability direct financial interest – owners, investors, creditors and.
Investment analyst - they are risk-appetite traders, individual investors, and financial institution looking for business opportunity to invest money into a company they often use company's account to evaluate the future growth and profitability of a business. Investors and lenders rely on financial accounting to obtain critical information about the financial health and risks of businesses the most important benefit of financial accounting, and the benefit the financial accounting standards board, or fasb, most emphasizes, is the access to information.