Lesson 2: Interpreting company accounts
When interpreting financial statements it is important to ascertain who are the users of accounts and what information they need:
- shareholders and potential investors are primarily concerned with receiving an adequate return on their investment, but it must at least provide security and liquidity
- suppliers and lenders – concerned with the security of their debt or loan
- management – concerned with the trend and level of profits, since this is the main measure of their success.