3.5.1 Interpretation of Financial Accounts

Question 1

Stakeholder interests in statement of comprehensive income: Shareholders

Answer 1

Interested in profit for the year as this may indicate potential returns for shareholders.

Question 2

Stakeholder interests in statement of comprehensive income: Managers

Answer 2

Use revenue, gross profit and operating profit to measure performance and set targets.

Question 3

Stakeholder interests in statement of comprehensive income: Government

Answer 3

To identify level of taxation business needs to pay.

Question 4

Stakeholder interests in statement of comprehensive income: Employees

Answer 4

Profitability of business may indicate potential for rumination and rewards.

Question 5

Stakeholder interests in statement of financial position: Shareholders

Answer 5

Analyse asset structure of business to see how investment has been spent.

Question 6

Stakeholder interests in statement of financial position: Managers

Answer 6

Analyse liquidity and level of risk associated with debt.

Question 7

Stakeholder interests in statement of financial position: Suppliers

Answer 7

Whether the business will be able to pay its debts and support any decisions around credit agreements.