Professional Documents
Culture Documents
I. Internal users
These include all internal individuals in the company such as;
Managers
As for managers it provide a more comprehensive view of the financial position of an
organization, financial analysis is performed with the information supplied in the
financial statements. The financial statement is used to formulate contractual terms
between company and other organizations.
Owners
They want to be able to see whether or not the business is profitable. Apart from that they
also want to know what financial resources of business are.
Employees
The employees are interested in the financial statement on account of various profit
sharing and bonus schemes. Their interest may further increase in case they purchase
share of the companies in which they are employed.
External users
These include those groups of individuals outside the organization, who are interested in
a company’s financial situation / position, including:
Tax inspectors/government
They need to be able to calculate the taxes payables. Take an example of TRA (Tanzania
Revenue Authority), this is a government agency in collecting tax from different
businesses; which means that to be specific in collecting a certain amount from any
business source TRA usually uses financial statements that assist it in knowing the
financial details about a business concern different exchanges that takes place. Hence
through sources like income statement TRA can know profit and losses that a company
went throughout the business period.
Bank/ lenders
If the owner wants to borrow money for use in the business, then the bank will need such
information. Technically for a company to get a loan from a bank it is required to present
its financial statement that will show how it operates and other corresponding things that
will assist a bank in analyzing the financial position of a company.
Potential investors
These are group of people who are interested in knowing the financial position of the
company for the purpose of investing in the company or not. Mostly they are interested
in analyzing the company’s financial statements such as balance sheet, cash flow and
other which normally show the map of exchange and other financial activities takes place
in the company.