Why might each of the following individuals or groups be interested in a firm's financial statements?

(a) the current stockholders of the firm; (b) the creditors of the firm; (c) the management of the firm; (d) the prospective stockholders of the firm; (e) the Internal Revenue Service; (f) the SEC; (g) the firm's major labor union.

1 Answer

  • 1 decade ago
    Favorite Answer

    Well, since no stockbrokers have rushed to answer, I'll give it a try.

    The current stockholders want to know whether to keep or sell the stock, or buy more. The creditors want to know whether or not their loan will be repaid. The management wants to know when it is time to retype his/her resume. The prospective stockholders want to know if they will make money; the IRS wants to know EVERYONE's business, to know how much money they can gouge. The SEC wants to be sure the firm is not breaking any rules. And the labor union wants to know how much to demand next time the contract is up for renewal.

    In other words, all want to know whether or not the firm is making money, and can be predicted to continue making money.

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