Question

State any one user of Financial Statement Analysis.

Hint:

When asked for users, quickly recall the two broad categories: Internal (Management, Employees) and External (Investors, Creditors, Government, Public).

Answer 1

Step 1: Understanding the Concept:
Financial statements are prepared not just for record-keeping, but to communicate the financial health of a company to various interested parties so they can make informed decisions.

Step 2: Detailed Explanation:
Various parties use financial statement analysis, categorized generally as internal and external users:
- Investors (External): Need to assess the profitability and financial strength to decide whether to buy, hold, or sell shares.
- Creditors/Lenders (External): Need to know if the company can pay back its loans and interest on time.
- Management (Internal): Need it for planning, controlling, and decision-making.
- Government (External): For tax assessment and regulatory purposes.
The handwritten note correctly identifies "Investors" as a primary user.

Step 3: Final Answer:
Investors (or Management, Creditors, Government, etc.) are users of Financial Statement Analysis.