that is helped by the availability of accounting information. You will study about the types of accounting information and its users later in this chapter. Box Why do the Users Want Accounting Information? The owners/shareholders use them to see if they are getting a satisfactory return on their investment, and to assess the financial health of their company/business.
The directors/managers use them for making both internal and external comparisons in their attempts to evaluate the performance. They may compare the financial analysis of their company with the industry figures in order to ascertain the company’s strengths and weaknesses. Management is also concerned with ensuring that the money invested in the company/organisation is generating an adequate return and that the company/organisation is able to pay its debts and remain solvent. The creditors (lenders) want to know if they are likely to get paid and look particularly at liquidity, which is the ability of the company/organisation to pay its debts as they become due.
The prospective investors use them to assess whether or not to invest their money in the company/organisation. The government and regulatory agencies such as Registrar of companies, Custom departments IRDA, RBI, etc. require information for the payment of various taxes such as Value Added Tax (VAT), Income Tax (IT), Customs and Excise duties for protecting the interests of investors, creditors(lenders), and also to satisfy the legal obligations imposed by the Companies Act and SEBI from time-to- time.