Question

Why the following three groups of stake holders would be interested in different ratios? (10)
 Management
 Owners
 Lenders

Answer 1

Management:

Management is interested in different ratios to analyze the effectiveness of its policies and decisions. These ratios help Management to know the profitability,liquidity position, short term and long term solvency position, and return on investment generated from the business.

Owners:

Owners are invested in different ratios to analyze the solvency position of their organization and to know the profitability of the organization. They also want to know the growth potentiality of an organization and saftey of their investment.

Lenders:

Lenders are invested in different ratios to analyze the solvency position of their organization and to know the abiility of organization to pay interest and repayment of principle amount on due date.