Question

What other differences are there between the audiences and their needs for financial reports?

Answer 1

Financial reports are formal financial statements that are prepared and published annually and sent to company stakeholders and various other interested users. These reports assess the year's operations and discuss the companies' view of the future trends and the companies' prospects and growth. The Board of directors, stockholders, creditors, financial institutions and other investors are the audiences for financial accounting reports. Financial accounting presents a specific period of time in the past and enables the audience to see how the company has performed. The following Audiences are interested in the financial reports for the purpose mentioned below:

• The management constituting of Directors, Chairman, Managing Directors etc. is interested to know the profitability, liquidity, and cash flows of the organization every month, so that it can make operational and financing decisions about the business.
• Investors and potential investors are interested in their potential profits and the security of their investment. The security of their investment will be revealed by the financial strength and solvency of the company as shown in the statement of financial position.
• Employees are interested so that their pay and bonus can be enhanced.
• Competitors Entities competing against a business will attempt to gain access to its financial statements, in order to evaluate its financial condition. The knowledge they gain could alter their competitive strategies.