Recipients of financial reporting

The addressees of financial reporting are the subject of this article. Financial reporting serves a whole range of stakeholders.

Addressees of Financial Reporting

Financial reporting is especially important for capital providers, whether they are creditors (banks, private lenders) or shareholders. Such information about the company is very important for these groups and has a significant influence on their investment decisions. Financial reporting provides information about a company's earning power. In addition, stakeholders receive other useful information. For example, about the financing of the company, the importance of individual business sectors, and the market values of securities or real estate.

Thanks to the information about the company's financing, creditors and shareholders can also assess how high their personal risk is of suffering damage due to a company's payment default, or experiencing a total loss of stock market value.

An important tool is the cash flow statement. Thanks to it, changes in the stock of liquid assets of a company can be detected. Additionally, the income statement is of great importance. In the income statement, expenses and revenues are compared to each other.

Not only the capital providers are interested in a company's financial reporting but also customers, competitors, and for example the state as well. For customers, the information contained in an annual report is relevant for deciding whether to buy a product or not. Especially for products where support by the manufacturer and warranty services are important, the solvency of the company and thus its long-term existence are of great significance.