Question

Share a media-related or personal example that investors/creditors/suppliers/customers use financial information when they make their investment/lending/purchasing decisions

Answer 1

ANSWER-

Step-1( Meaning of financial information)

Financial information means all the financial statements, reports and position information of a company etc. Financial information is used for multiple reasons like financial information helps in decision making process and it also helps to know more detailed information about the financial performance and efficiency of a company etc. Users of financial information are owners (shareholders), investors, suppliers, creditors, management, customers, government agencies etc.

Step-2(Use of financial information)

As we know, Investors, owners, suppliers, creditors and customers are one of the users of financial information. Because, they use the financial information to invest in the company, to know the financial performance and liquidity to know how fast a company or any other can pay off its liabilities. By using the financial information they decides to invest or not, how much risk in it etc. And creditors and Suppliers use the financial information for deciding Whether to lend money or not, if the financial information shows a good position of company and good history of paying off of their liabilities. So, lenders can easily lend money to the company. In same way all the users, use financial information to know about its financial positions and performance so they can easily lend money or can easily do transactions with the company.

Step-3 (Personal example or Practical example)

let us take a practical example, which we exercise or experienced in our life.

• When we invest our money, we research about where to invest our money, where the interest of money is more, for how long period we have to invest. We mainly focus on where to invest, we research on each of the company where we have to invest, we use its financial statements and performance reports for know about its financial performance etc. We invest only in that company which financial statements and performance is reliable and accurate.
• When we do purchase in credit and sale in credit , we first make decisions based on creditors history of its financial positions to know that we are purchasing from a good creditor and Suppliers.
• In the same way, Customers also uses the financial information to know more about the company its financial positions and performance,it's goodwill, for its Customer satisfaction results. As we do the same thing, we purchase goods only from the company which has good financial performance and goodwill.