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Lecture 1

ACCO 230 Lecture Notes - Lecture 1: Prentice Hall, Capital Market, Financial Market


Department
Accountancy
Course Code
ACCO 230
Professor
Elizabetta Ipino
Lecture
1

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CHAPTER$1$
1
Handout #2 The main users of accounting information
Using a stakeholder perspective, the users of accounting information include “all those who may
have an interest in the survival, profitability and growth of a business” (Kothari and Barone1,
2006 - p. 7).
Figure 1: Financial and Managerial Accounting systems and users
(1) Investors:
Including: owners (shareholders) and potential investors
They need financial information on the organization to assess how effectively the managers are
running it and to make judgment on the risk of their investment and on the future growth
perspectives. Investors want to evaluate the ability of the company to pay them a return
(dividend) and the possibility of earning a capital gain (sell their share of the company at a higher
price than they paid).
Financial analysts who are advising their clients on the opportunity of investing in a company
need the same information as investors.
(2) Lenders: (or financial creditors)
Such as banks
They need financial information on the organization in order to assess its ability to meet its
obligations: repay the amount borrowed at due date and pay interests.
Credit rating agencies are also interested in the same information because they rate companies
according to their ability to meet their credit obligations.
(3) Suppliers: (or trade creditors)
They need to determine whether the company will be able to pay the amounts owed for the
delivery of ingredients or merchandises for example. If the company is their main client the
supplier can then be strongly dependent upon its continuation.
1 Kothari J., Barone E. (2006), Financial Accounting an International Approach, Ed. Prentice Hall FT.
Accounting)
System)
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