BM U3.4.1 - Final Accounts + its Purpose for Diff. Stakeholders

define a final account

published annual financial statements that all limited liability companies are legally obligated to report

namely the profit and loss account + balance sheet

How does the purpose of the final account differ for internal vs external stakeholders?

• Internal: To manage the biz + aid decision-making (ex. Executives + directors)

• External: Support evaluative judgement (ex. The firm’s ability to pay suppliers or financiers)

What is the purpose of final accounts for shareholders?

Calculate dividends & ROI → determine buy/hold/sell

What is the purpose of final accounts for employees?

Determine job security + prospects of pay increases

What is the purpose of final accounts for managers?

Determine the operational efficiency of the biz + devise strategies for future growth

What is the purpose of final accounts for competitors?

To compare performance + set benchmarks for key performance indicators

What is the purpose of final accounts for government?

ensure correct tax payments (specially in MNCs)

What is the purpose of final accounts for financiers/ lenders?

Determine the viability of providing funds (loan capital) + appropriate interest rate to charge

What is the purpose of final accounts for potential investors?

To determine the worthiness of investing in the biz + prospects for financial returns in the near future

What is the purpose of final accounts for suppliers?

Determine the ability of biz to pay (trade credit) + possibility of extending credit terms + assurance of payment