Financial Statement Analysis is a technique used to examine and assess a company's accounting reports (financial statements) to evaluate its past, present, or projected future performance. This evaluation process enables better decision-making in terms of the company's economic activities. Financial statement analysis has various users, which can be categorized into internal and external users. Internal users refer to the company's management who analyze financial statements to make decisions regarding the company's operations. On the other hand, external users may not be directly associated with the company but still have a financial interest. These external users include owners, investors, creditors, government entities, employees, customers, and the public. The roles and importance of these users are explained below: The company's managers utilize financial statement analysis to make informed decisions about their performance. For example, they may analyze their accounting reports to determine the cost per distribution channel or the amount of cash remaining, and then make decisions based on these analysis results. Small business owners require financial information from their operations to assess the profitability of their business. This information aids in making decisions such as whether to continue operating the business, whether to enhance business strategies, or whether to discontinue the business altogether.
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