Meaning of Financial Statement and its users

Financial statements are historical documents which show the organised summaries of detailed information about the financial performance and financial position of an accounting entity for an accounting period


The users of Financial Statement are as follows:

1. Investors:  The investors are interested in information on the risk and return on their investments. they need information to determine whether they should buy or hold or sell the shares.They are also interested in information which enables them to assess the ability of the enterprise to pay dividends.

2. Employees:  Employees and are interested in information about the stability and profitability of their employers.They are also interested in information which enables them to assess the ability of the enterprise to provide remuneration, retirement benefits and employment opportunities.

3. lenders:  Lenders are interested in information which enables them to determine whether their loans and the interest will be paid when due.

4.Suppliers and other trade creditors:  Suppliers and other creditors are interested in information which enables them to determine whether their dues will be paid on time.

5.Customers: Customers are interested in information about the continuance of an enterprise especially when they have a long term involvement with or are dependent on the enterprise.

6.Government and their agencies: Governments and their agencies are interested in the allocation of resources and therefore the activities of enterprise. They also require information in order to regulate the activities of enterprise and determine taxation policies.

7.Public: Financial statements may assist the public by providing information about the trends and recent developments in the prosperity of the enterprise and the range of its activities.