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Business Account Finance and Accounting - Essay Example
Finance & Accounting
Pages 6 (1506 words)
Business accounts Date Financial statements are prepared to show the financial position of a firm or an organization. Financial information that can be extracted from the financial statements are important to various stakeholders…
Each of the users has different needs and interest on the financial information. First, the investors require financial information to assist in making investment decisions. Before putting their resources for investment purposes, investors have to evaluate the performance of firms to establish whether the businesses can enable them earn their required rate of return (Fess & Warren 1993). This would help them make investment decision and determine what amount to invest in a firm. Shareholders are also interested in the financial performance of the firm as it determines the dividends they will receive and the worth of their investment. Firms with good financial performance well will have good share prices and shareholders will need this financial information to determine whether to sell their shares or buy more shares (Nikolai, Bazley, & Jones 2009). Lenders are the second users of financial information. Lenders are either individuals or financial institutions that offer loans to firms that are need of funds. Before making their lending decision in terms of whether to lend and what amount to give to firms. They have to look at the financial performance to determine the risk of their money. The lenders will be interested in the performance of the firm within the duration of their loan (Fess & Warren 1993). ...
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