— Kishore V, SME and ACW at Edumarz
Following are the importance of financial statements:
1. Shareholders:
A financial statement aids a shareholder in identifying a company’s liabilities and profit-making capabilities. It gives adequate data for firms to analyse their financial health and performance.
2. Creditors:
A financial statement is required for a creditor to comprehend the company’s creditworthiness and liquidity. It assists them in determining if more investments in this firm are feasible.
3. Government:
A financial statement assists the government in estimating GDP, national income, industrial growth, and other factors that influence the creation of policies and the resolution of issues such as poverty and unemployment.
4. Investors:
A financial statement is required for investors who have invested or plan to invest. A financial statement aids in the evaluation of fresh investment opportunities and liability.