Gamez, Eileen Final Paper Week 5 ACC305

Gamez, Eileen Final Paper Week 5 ACC305 - Importance to...

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Importance to Stakeholders’ - 1 - Stakeholders’ and Financial Statements Eileen M. Gamez Intermediate Accounting I ACC305 Professor Jess Stern August 7, 2011
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Importance to Stakeholders’ - 2 - In today’s day and age there is no easy way of telling which companies are doing well and which are almost down in the dumps. Banks, lending facilities, and/or external stakeholders are greatly interested in seeing where companies are in the market compared to their competitors. These companies take the most risk by investing their monies into entities that are not started, maintained, or organized by themselves. There are many factors that come into play when external stakeholders are looking to make a decision on where to place their money. Those factors include, but are not limited to, the items being sold or produced, the message the company has to offer, etc. Most importantly external stakeholders use financial information to make decision on whether the company is profitable, has too much debit, etc. “The information provided by the financial statements help support their decisions and actions to the enterprise.” (Baskerville, May 2011) Basically banks, lending facilities, and/or stakeholders need to know where a company stands in the market and in profitability. The best way for them to conclude that is by looking at companies’ Financial Statements, financial reports, and with the use of financial ratios. Before getting into detail on financial reporting’s and what exactly they are it is essential to understand who exactly those external stakeholders are. External stakeholders are composed of investors, lenders, suppliers, customers, Government agencies, competitors, labor unions, supporters and opponents, just to name a few. These are essentially people and/or companies that may have interest in what goes on with known businesses or companies. Stakeholder’s main interests are profit growth and dividends because their goal is to get a return on the money they invested.
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Importance to Stakeholders’ - 3 - “Investors are stakeholders that buy shares in a company.” (Baskerville, May 2011). Their primary interest in knowing that the company is doing well so that they can put their money into the company for a greater return. Lenders are external stakeholders who lend money to that enterprise on either a short or a long term basis usually charging a fee or interest to make some money in return. Lenders are regularly composed of banks or other types of financial institutions. Suppliers are also interested in how a company is doing because they want to make sure that they will get paid for their products and services at a later time. Customers are stakeholders that want to know the financial strength of a company because they want to know that their supplier is going to be a dependable source. Competitors are also financial stakeholders because they have a need to know where their companies lie in the market and the only way to see that is by
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Gamez, Eileen Final Paper Week 5 ACC305 - Importance to...

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