Essay about Importance of Economic Statements to Managers, Shareholders and Creditors

Term: Dinh Thi Quyen

Category: A4 – LT6B

Number: 24

Essay: Importance of financial assertions to managers, investors and creditors

Monetary statements are crucial reports. They show what sort of business has been doing and are very useful internally to get a company's stockholders and to the board of directors, it is managers plus some employees, which include labor unions. Externally, they may be important to potential investors, to government agencies in charge of taxing and regulating, to lenders including banks and credit rating organizations, and to expense analysts and stockbrokers. They are especially useful to managers, traders and collectors. Firstly, managers of businesses, more than any of the other users, benefit many from the utilization of financial statements, especially those who also are good for understanding and analyzing the statements above. Managers are able to not only discover problems and locate corrective actions needed through financial transactions but they are as well able to generate projections of the statements that act as goals and specifications for future periods. They are then capable of assess activities against these projections towards the end of the accounting period. Managers are also generally concerned with the financial ratios. First the ratios offer indicators showing how well the corporation and its business units are performing. Some of these percentages would ordinarily be used within a balanced scorecard approach. The specific ratios picked depend on the company's strategy. One example is a company that wants to focus on responsiveness to customers might closely screen the inventory turnover ratio. Since managers must report to shareholders and may even wish to increase funds via external sources, managers need to pay attention to the economical ratios utilized by external stocks to evaluate the company's investment potential and creditworthiness. Secondly, Investors are generally considered one of the primary users of financial claims. They use the financial transactions to determine the...



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