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Be able to evaluate the financial performance of a business
Finance & Accounting
Pages 7 (1757 words)
Be Able to Evaluate the Financial Performance of a Business PART A: AC 4.1 Discuss the main financial statements: Different users of financial statements use these for varying purposes: Owners and Managers: They use financial statements to formulate significant business decisions that will affect the company’s operations. Besides they also rely on such financial statements to prepare their annual report to be presented to the board and shareholders.
Investors often use financial analyses for making appropriate investment decisions. Financial Institutions: In order to arrive at suitable decisions regarding granting a company with extended debt securities like debentures or long-term bank loan, or new working capital etc, financial institutions will need to verify the financial statements of companies. Government Entities: They need to verify these statements to determine the correctness and accuracy of taxes and further duties stated and paid by a business. Such statements will also help them in ensuring that the company is operating within the framework of relevant statutes and are complying with all statutory obligations. Vendors: Financial statements help them evaluate the creditworthiness of the company so as to enable them to take appropriate decisions. Media and the General Public: Financial statement allows this interest group to evaluate the performance with respect to ethical trading, compliance of environmental spending etc. ...
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