Who typically uses financial statements?

Financial statements are crucial tools for various stakeholders when assessing the financial health and performance of an organization. Management uses these statements to make informed decisions about operations, investments, and future strategies. They provide insights into revenue, expenses, assets, and liabilities, allowing management to plan effectively and set goals for growth.

Government agencies utilize financial statements to ensure compliance with regulations and statutes, evaluating a company's adherence to financial reporting standards and tax obligations. These agencies may include tax authorities or regulatory bodies ensuring fair practices within the industry.

Creditors, including banks and lending institutions, rely heavily on financial statements to assess a company's creditworthiness before extending loans or credit. They analyze the financial data to determine the risk involved and to ensure that the borrower can meet their financial obligations.

The combination of these groups highlights the broad utility of financial statements in providing transparency and supporting various financial decisions across different areas. While shareholders and investors indeed find these documents useful, the inclusion of management, government agencies, and creditors captures a more comprehensive range of users who depend on the data presented in financial statements.