Question

What are some of the key stakeholders of finance information? For what purposes would stakeholders use financial information for decision making?

Answer 1

The financial information is used by the stakeholders of the firm for decision making purposes.The stakeholders of the firm can be internal and external.The internal stakeholders are the management ,owners and employees.Some of the key internal and external stakeholders are mentioned here.The external stakeholders include the creditors of the firm, the various government agencies, the suppliers,customers .The owners of the firm uses the information contained in the financial statement to assess the returns the firm is generating on the capital they have invested in the firm.The management of the firm can use the financial information to determine the profit the firm generates and the efficiency of it's operations.The employees if provided with the financial information pertaining to the firm will be able to develop a deeper understanding of how the firm works ,and thereby get more involved.The external stakeholders of the firm like creditors of the firm use the financial information to determine the credit worthiness of the firm, so as to decide whether to lend money or not.The government(tax authorities) can use the financial information for tax computation purposes.The customers of the firm can analyze the financial information pertaining to the firm made available so they can determine whether the firm is in a position to honor it's commitments.The suppliers of the firm can assess the financial health of the firm by analyzing the statements so they can determine whether it's viable to be in business with the firm.These are the various purposes for which the key stakeholders use financial information for.