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Read this article to learn about the following thirteen users of financial statements, i.e., (1) Shareholders, (2) Debenture Holders, (3) Creditors, (4) Financial Institutions and Commercial Banks, (5) Prospective Investors, (6) Employees and Trade Unions, (7) Important Customers, (8) Tax Authorities, (9) Government Departments, and Others.
1. Shareholders:
Divorce between ownership and management and broad-based ownership of capital due to dispersal of shareholdings have made shareholders take more interest in the financial statements with a view to ascertaining the profitability and financial strength of the company.
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2. Debenture Holders:
The debenture holders are interested in the short-term as well as the long-term solvency position of the company. They have to get their interest payments periodically and at the end the return of the principal amount.
3. Creditors:
Potential suppliers of goods and materials and others doing business with the company are interested in the liquidity position of the company.
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4. Financial Institutions and Commercial Banks:
These financial institutions are interested in the solvency – short-term as well as long-term – and profitability position of the company.
5. Prospective Investors:
Prospective Investors are interested in the future prospects and financial strength of the company.
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6. Employees and Trade Unions:
Employees and Trade Unions are interested in the profitability position of the company.
7. Important Customers:
Important Customers who want to make long-standing contract with the company are interested in its financial strength.
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8. Tax Authorities:
Tax Authorities are interested in the profits earned by the company.
9. Government Departments:
Government Departments dealing with the industry in which the company is engaged are interested in the financial information relating to the company.
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10. Economists and Investments Analysts:
Economists and Investments Analysts are interested in the financial and other information of the company.
11. Members of Parliament:
Members of Parliament the Public Accounts Committee and Estimates Committee – are interested in the financial information of the government companies
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12. SEBI and Stock Exchanges:
SEBI and Stock Exchanges are interested in the prospects and performance of listed companies with a view to protecting the interests of investors.
13. Managers:
Managers are interested in knowing through the financial statements the present position and future prospects of the company. This is mainly to review the company’s progress and position and take decisions for the future.
