users of financial statements

INT / INC - 1
Users of Financial Statements
What you look for in the statements depends on your objectives
ûEquity investment: profitability, risk, cash generating ability
ûMerger and acquisition: profitability, risk, price to pay, impact on financial
statements.
ûCredit extension/Customer health: short-term vs. long-term, ability to pay interest &
-principal, liquidity.
ûSupplier health (supplier of key raw material, supplier's quality, JIT): cash
generating ability, profitability.
ûEmployer health (employees, unions): long-term viability & ability to meet pension
liabilities, profitability, risk.
ûInternal operation analysis: analysis of business segments performance, cost,
profit, budgeting, and business strategy.
ûAntitrust regulations: monopoly power (profitability, market share), cost of capital,
justifying merger through "failing company doctrine" disregarding monopoly
consideration.
ûCompetitors analysis: profitability, profit margins, market share (aid...