Financial Statements and External Users’ Wealth Related to Decision-Making

Abstract

The corporation's financial statements comply with legislation and regulations. Financial statements provide information that is very essential to interested parties, such as shareholders, creditors, and financial institutions, for decision-making. Throughout the information, the interested parties will decide whether to invest or provide credit to increase their wealth. In addition, financial statements become tools for identifying the financial situation of the business, whether it is good or bad. The financial statements will show a company's ability to provide a better dividend that can increase shareholder wealth. Furthermore, creditors, and financial institutions may provide credit and loans to company if the financial statements show a better profit, which is linked to the capability of the company to settle all debts. Financial statement information can enhance the wealth of shareholders, creditors and financial institutions through improved decision-making.