The financial statements comprise Trade Accounts, Profit and Loss Accounts and Balance Sheets.
Financial statement information is useful to the following parties:
Investors → knowing the return on investment Creditors → knowing the ability to repay debt Casher → knowing the financial position of business when considering a loan/overdraft The management itself → to plan and control business activities and to compare business performance.
Performance comparison can be done: (a) internally – Financial statements between the accounting periods of the same firm. (b) externally – Financial Statements between different firms of the same industry.