THE UNIVGERSITY OF THE PEOPLE

BUS 1102

LEARNING JOURNAL UNIT 1

Company name: Xylem enterprise

How financial statements are helpful to the business owner, stakeholder and investors.

Financial statements are important because they contain significant information about a

company's financial health. Financial statements help companies make informed decisions since

they highlight which areas of the company provide the best ROI (return on investment).

Therefore, financial statements are crucial to the business owner, stakeholder and investors;

Business owner: A big reason why understanding the financial statements is so important is that

it allows the owner of Xylem enterprise, to do one of the most important things for the business,

which is to create a profit plan for your business. For that reason, these statements are incredibly

useful for decision making regarding expansion and alternative financing options. They also play

an important role in marketing decisions, since this data indicates which of the company’s

operations will provide the best return on investment. Considering the influence these statements

have on business decisions, they should be managed on a regular basis by the owner.

Stakeholders: Financial information contain in annual reports that the companies are published in

periodically. That period is identified as reporting period. Company obligates to provide

financial information to their various stakeholders during the past reporting period. Thus,

stakeholders require information from the financial statements for the following reasons;

 To know how well the company (Xylem enterprise) is doing.

  To find company has earned more money than they spent.

 To get an idea about strategic and tactical plans of the management.

 To provide information to make decisions who make decisions about organisatoin.

 Avoid dissimulations and corruptions of the organisation.

Furthermore, in business there are two types of stakeholders that’s: internal stakeholders and

external stakeholders. Internal stakeholders mean those stakeholders are dwell inside the

company for examples: managers, employees, board members etc. On the other hand, those

stakeholders are not directly a part of a company is called external stakeholders for examples:

shareholders, customers, suppliers etc. All shareholders want to see the use of their investment

and thus asses the management through the financial statements. Because financial statements

are very useful for businesses. The usefulness of financial statements to stakeholders is given

below that’s are: how much is the profit and loss in their business, how much money the invest,

how do assets stack up against liabilities, where did the business get its capital, how is it making

good use of the money, What is the cash flow from the profit or loss for the period, did the

business reinvest all its profit, how much is their costs, how much money they paid, Does the

business have enough capital for future growth etc.

Investors: Financial statements are important to investors because they can provide enormous

information about a company's revenue, expenses, profitability, debt load, and the ability to meet

its short-term and long-term financial obligations. There are three major financial statements.

A company’s financial statements provide financial information that investors, creditors and

analysts use to evaluate a company’s financial performance. A good deal of the information

presented in a financial report is required by law or by accounting standards. Your company's

financial statements are important tools for senior managers to communicate past successes as

well as future expectations. By publishing financial statements, management can communicate

with interested outside parties, such as investors, the news media and industry analysts about

its accomplishments running the company.

Inconclusion, Xylem enterprise need financial statement information to the owners, stakeholders

and investors.

WORDS: 574

UKEssays. (November 2018). Importance of Financial Information to Stakeholders. Retrieved from

https://www.ukessays.com/essays/accounting/importance-of-financial-information-to-stakeholders-

accounting-essay.php?vref=1

UKEssays. (November 2018). The Usefulness Of Financial Statements To Stakeholders. Retrieved from

https://www.ukessays.com/essays/accounting/the-usefulness-of-financial-statements-to-stakeholders-

essay.php?vref=1