Question

Problem 4   Identify two different types of stakeholders that rely upon financial information provided by a firm’s CFO/ Accounting manager. For each type, identify examples of the kind of information that the stakeholder needs, and the likely published / available source of the information (what output from the system will provide the needed information). I’m looking for specific examples on this answer not broad generalized commentary.    I need to see effective depth in your discussion.

Answer 1

Uses of financial statements and information for different stakeholders:

1. Management- To understand the profitability, liquidity, solvency ratios and take operational decisions accordingly every month. These are available in the Balance sheet, P/L Account of the Company. Sources of financial statements of a company: Moneycontrol.com

2. Customers- When buyers want to select suppliers, they generally rely on the financial statements of the Company to check whether the supplier will be able to sustain itself in the long run so as to continue the relationship.

3. Employees- They need to know the Company they are working for in and out so as to develop better understanding and motivation towards work. They can get this information from the financial statements itself.

4. Investors- shareholders or potential investors check the financial statements thoroughly before they make an investment decision regarding buying the company shares.

5. Lenders- lenders like Banks will need the financial statements to assess the liquidity and solvency levels in particular potrayed by debt equity ratio, ISCR, DSCR etc.

6. Government: Needs to assess the financial statements to understand if propoper amount of taxes have been paid by the Company for the assesment year.