Information Of Financial Statements

  1. The financial statements comprise Trade Accounts, Profit and Loss Accounts and Balance Sheets.
  2. 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.

  1. 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.