Consolidated Financial Statements
How information needs of different user groups vary? Financial information obtained from reports is used by a wide number of stakeholders in all business industries. Users of financial information are divided into external and internal users. Despite the class or group of the user, one is placed, it is necessary to take note of the fact that users need this information to make better financial decisions (Jury 2012, pp. 42-49). Financial information users are therefore classified or listed as follows;
Internal users Management
Financial information is always presented to internal users in the form of management accounts, budgets, forecasts, and financial statements. The above tools or documents are important to the users in that they need them to steer effective decision for the company. Ranging from pricing, allocations, and investment decisions, it is wise for a user to consider the comprehensive usage of these statements.
Management – Management is considered to be the engine of any organization. This is because the management takes charge of day to day running of the organization. Based on this, the management needs financial information to help them analyze organizational performance and position. From the effective analysis of the organizational position, the management will be well placed to make appropriate decisions towards improving company results. The manner in which management uses financial information is different from how other users apply the same. For example, management needs a budget to determine the allocation and funds sourcing for various projects. It is important to note management is a center of decision making when it comes to resource allocation, investment, and income sharing. This makes the management a vital user of financial information.
Employees serve employees - Every company or organization, this implies that employees need vital information for effective service delivery. In most cases, employees assess various situations such as profitability and stability among others. It is important to note that employees find it pleasing working for well performing and stable organizations. To ascertain the stability of their employers, employees use information from financial statements such as balance sheet, income statement, and forecast among others. Employees love working for organizations with a going concern concept. A going concept in any organizations is only assessable from information obtained from the balance sheet and income statement. Owners – Owners or shareholders happen to be a special group of information users.
This is because they have a special interest regarding financial investment. Based on the fact that owners invest and expect income, it is important to provide them with information that will help them analyze key areas such as viability and profitability among others. In most cases, the number of owners or shareholder have increased or reduced their investment interest based on financial information provided. It is, therefore, necessary that the owners are served with valuable financial information to determine the key course of action regarding the future. External users
External users just like internal …