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Business Account Finance and Accounting - Essay Example

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Business Account Finance and Accounting

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). ...
The employees also need the financial information to help in the formulation of new strategies that are meant for improving the performance of the organization. Financial information as well is needed by the employees to determine the organization continued existence for job security purposes. Creditors and suppliers are also interested in the financial information to determine the ability of the business to pay their owing debt as they fall due. This group is interested in the short term liquidity of the business rather than the long term performance (Deloitte 2011). Firms with good financial performance will have reliable creditors. Moreover, customers are also interested in the financial performance of the business in cases where they are interested in long term relationship with the business. Customers who depend solely on the business for their products will need to require surety of the business continued existence. Notwithstanding, the government authorities be it federal or state need the financial information for regulatory purposes. The security exchange authority will need the financial information to determine the policies and to determine the national income of the country (Deloitte 2011). They also require the financial performance as a way of determining the soundness of the capital markets. The public may also be interested in the financial performance especially to businesses that affect the general public good. The public closely monitors businesses that are major employers or contribute substantially to the economy (Kravitz 1999). Finally, the management, though in control of the preparation of the financial statements, need the financial ...Show more

Summary

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…
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Business Account Finance and Accounting Essay essay example
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