Are you struggling to decide if you need to use accounting data? Our Accounting experts at GCS Malta are here to break it down for you in the following article. Financial reporting is used for various purposes by different users that result in contrasting needs from accounting information.

Stakeholders and their need for accounting data.

Capital Markets.

Data provides the most recent measure of a company’s performance, and hence, the stock price moves up and down concerning financial data. Therefore, accounting information is widely used in capital markets.

Lenders.

Accounting data for this sector helps lenders hedge their risks and judge the firm’s creditworthiness. They look at the firm’s financial statements to form a conclusion on whether or not it can meet the loan obligations from its current cash flow.

Government.

The government needs accounting data to ensure they have been paid their share in taxation. It is done by taxing the business at the profit that has been generated. Profit is the result of the preparation of the Income Statement, and taxes are an expense for the organisation. Thus, the corporation will reduce this liability by showing fewer profits and accounting data will ensure all taxes have been paid.

Employees.

Employees provide credit to the company in the form of their labour. They work immediately and expect payment at the end of the month, providing 15 days of average credit to the employer every month. They have a right to be concerned about the firm’s internal workings and whether they will be paid or not. Recent cases have brought to light the need for employees to look at the companies’ financial statements that they work for.

Managers.

Managers are in charge of controlling the operations of the firm. However, control largely depends on the availability of correct information at the right time. This function is served by accounting. Managers get periodic updates about the state of affairs and can analyse the same and improve their performance in future periods.

Why GCS Malta?

Our Accounting department is equipped with highly skilled and experienced accountants who can aid businesses in all their accounting issues. Contact us today for further information.