Financial statements are primarily prepared by the company to explain to the company's owners or shareholders how the company that they own has performed. However, there might be many other different parties who would be interested in knowing about a company's finances for many different reasons, especially if that company is publicly traded. Let's consider some of the external users of financial statements and what they might be most interested in. Bear in mind that these people will not only look at the financial statements, but they will often be the best starting point for their analysis due to the range of information that they contain. Investors, prospective investors in a company want to know if the company is a good one to invest in. There are many questions they may have, such as what has the business done with the money invested in it in the past? Have the funds been used wisely to generate returns for investors? And what is the possible future performance of this business? While financial statements are historic reporting the past performance of the business, this does give investors a useful starting point from which to think about possible future performance. Lenders, people that have lent money to a company or that are considering doing this such as banks or bond investors will want to know whether they'll get back any money they lend to that company. From the financial statements, lenders can see things like the amount of debt the company currently has, how much interest they're currently paying, and be able to assess their capacity to meet the interest and debt repayments from cash flows generated by the business. Suppliers, if a supplier transacts with another business on credit terms, allowing them to pay for the goods later, they'll want to know that they will eventually get paid. A company's financial statements can help a supplier see if the company has enough resources or if they will generate enough cash in the future to pay their bills when they become due. Financial statements can also help a supplier to gauge the overall health of the business and its longer term prospects. Since there's not much point in establishing a relationship with a company that may not be around long into the future Customers, as a customer, the financial health of the company may impact your purchasing decisions. Maybe you can relate to this. If you were in the market for a new appliance, say a refrigerator, you would probably prefer not to buy from a company that's in financial trouble, as any warranty you might have would effectively be useless. This is a really important consideration for business customers when choosing suppliers. You want reliable suppliers that will be around in the long term to help make this assessment. The information Financial statements show can be very useful.