Relevance

Financial statements must be applicable to the decisions being made, and presented in a way that
allows for distilling useful insights.

Materiality

The information present must be of the quality that indicates consequences in strategic or legal
decisions. This is to say that nothing of materiality should be omitted as well.

Reliability. All information must be free of error and reported with pin-point accuracy.

Understandability

Clarity and efficiency in presentation is important, as it must be immediately readable and without
the possibility of being misinterpreted.

Comparability. Finally, all presented financial statements should align with current best practices in
accounting to ensure that the material presented is valid compared to that of other organiations.

Usefulness of the financial information to both internal and external

Manager may also need this information to do their task in that, they have to make
decisions for example, when to add debt or how to maintain cash flow.
Business owners also use the statements to evaluate whether their investment is safe and
whether the company is providing an acceptable return on their money.
Lenders may also require the financial data when there is need of money from the bank.
Regulators
They also require the information for example, one will have to send the securities and
exchange commission copies of his or her statement, in case they are traded corporations.
Outside investors
For example lenders, stakeholder and venture capitalist will need to review the financial
statements of a firm before they write them a cheque.
Creditors
If you owe money or you are slow at paying your bills, your creditors may want to double
check your statements and also suppliers may review the financial health of a firm before
deciding to extend the credit.
Unions
If the cash flows and income are steady, the union may decide you can offer a more
generous employment package. Publicly traded companies financial statement as public
information, anyone who takes interest in your business may become an external user that
could include customers, competitors and the media
Management
Because those in management have to make decisions in the business, they need different
information than other internal users of financial statements; for example they may want
income statement for each product line in the store rather than for the business as a whole
The financial statement helps managers to know the financial position of the firm which will
in turn enable them to understand the performance of the firm in comparison to other
businesses in the same industry.
Shareholders
Being that shareholders are also the owner of the business but do not take part in decision
making and day to day activities, this financial statement are shared with the shareholders
at the annual general meetings held annually.
This statements enable them to understand how the company has been performing, also
allow them to judge the present and future performance.

Employees
There are companies that present a different financial statement for its employees;
employees may need the financial statement information for one, current and lastly current
condition as well as the future earnings.
The government
Government may use the firm’s financial statement for taxation purposes and also to
evaluate business performance of these companies in various sectors to assess the
economy’s performance.
The business
Debt management
Debt can cripple the progress of any firm no matter which sector the company belongs to.
Ratios like debt to equity, help the management make important decision related to debt
Conclusion
By external and internal users of the financial information getting accurate and regular
informed decision can be made quickly and swiftly. This helps in avoiding roadblock and
maintaining financial liquidity.
Financial information help business to understand the current weakness and overall health
of the company thus it is essential for users of financial information to access these
information.