2. Users of financial information

Question 1

Explain why owner is using the financial information for.

Answer 1

To make decision on how to plan, control, monitor and operate the business, and to decide whether to expand, continue or close the business.

Question 2

Explain why managers are using the financial information for.

Answer 2

To make decision on how to plan, control, monitor and operate the business.

Question 3

Explain why employees are using the financial information for.

Answer 3

To evaluate their career prospect and to decide whether to continue working for the business or not.

Question 4

Explain why investors are using the financial information for.

Answer 4

To access whether to increase, decrease or maintain their investment in the business. Potential investors may decide whether to invest in the business or not.

Question 5

Explain why suppliers are using the financial information for.

Answer 5

To know if the business is able to pay its debts when they fall due and if they should sell goods to business on credit.

Question 6

Explain why government is using the financial information for.

Answer 6

To access how much tax to collect from the business.

Question 7

Explain why customers are using the financial information for.

Answer 7

To access if business is able to provide after-sales service so as to decide whether buy from the business or not.

Question 8

Explain why competitors are using the financial information for.

Answer 8

To review performance against competitors and decide how to make improvements.

Question 9

Explain why bankers and lenders are using the financial information for.

Answer 9

To access the liquidity of the business so as to decide whether to grant the business loan or not.