Who has a direct interest in financial statements and who has an indirect interest in financial statements?
Users with a direct interest will generally have an economic interest in the specific entity, while users with indirect interests may not. The visual below summarizes who is typically considered a direct and indirect user of financial statements.
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Who are the primary users of financial statements?
Primary users of the financial statements are considered existing and potential investors, creditors, and lenders. Primary users obtain financial statement information and allow them to understand the overall health of the company such as its net cash flow status etc. Such users make decisions related to purchasing or selling interest in these reporting entities. Other […]
What is included in a company’s financial statements?
At a very high-level, there are 5 key sections to a company’s financial statements. There may be certain other requirements for public companies, NFP’s, or governmental entities. However, the five main components include the balance sheet, income statement, changes in equity, cash flow statement, and the notes to the financial statements.
What can financial statements tell readers?
Financial statements can be used for just about anything the reader wants them to be used for! Financial statements can tell the reader about the economic resources owned by the company, the solvency and liquidity, as well as their ability to obtain financing. Financial statements also provide a high-level of the operations of the business. […]