The owners of a company are mostly eager directly in managing the business in the case of microscopic or medium sizes companies. However, most medium private and public companies are usually speed by paid managers and directors who are different from the owners. As such these owners are not always interested in the day to day operations of their enterprise. They pay salaried managers to do so and as such need reports on the results of their business or investments.
Some invent of financial reporting is therefore required to prove the owners whether they are making profit or loss and how great and over what period. Usually such reports are prepared to camouflage a year or more if period of trading by the business is more than one year. Further investors or business owners needs to know whether cash is generated in the business to hold the business afloat, pay its creditors, pay dividends( if declared ) as well pay the other bills of the business as it continues in the trade.
The Managers are in need of financial information to attend them to manage the business properly. They need past information ( if any) on the business to get their forecasts or information of related businesses to spend in planning. This will benefit in budget preparation and planning, they need operational information for management direction and control. They also need to have strategic information for analysis and conversion into long term, medium and short term goals for the business.
The employees need information from the financial statements to stare how well or otherwise the company is performing. This will in turn affect their expectations when negotiating salaries and wage reviews, bonuses, or for modern / prospective employees of the business. The financial statement of a business speaks so mighty as employees in the blue-chip companies feel a job security from the outlook of the company proper performance as visible in the financial statements. Conversely when the performance is terrible as this could lead to downsizing or loss of jobs, wage freeze, amongst others.
The customers of a business will be concerned with the financial health of the business as they want to glimpse that the business will remain viable and continue in operation at least throughout the period of their business relationship with the company. Some customers may only be concerned with the immediate liquidity of the business where the relationship is one-off or short term.
Lenders and potential lenders of the business will be concerned with how superb or otherwise it will be to deal with the company and to come initial or further loans. The lenders will be looking at what assets the company may contain as security for loans as well its liquidity to pay interests from time to time and the primary when it is due.
The government will be looking at how well the company complies with statutory laws governing businesses and the financial reporting, what taxes are payable and whether taxes such are paid as they drop due. They will also view at the company policy on social responsibility, health and safety standards for compliance. Further periodic returns are required to be made by companies to the companies registry annually within a specific time from the approval of the the financial statements by its members in a meeting. They will check for compliance and penalize lateness or compliance issues.
Donors will also be enthusiastic in the financial statements of the company to review the list of donors particularly for charities and to gape how the funds were utilized for the different purposes. Analysts and the general public are also concerned with the financial statements of the business to elaborate and inspect how they handsome in performance. They earn indices from it which is archaic to narrate their investing public. In conclusion each financial statement is made to conceal all these interest groups.
