Shareholders need to know how much a company made on a per-share basis (earnings per share) and how that compares with previous quarters–whether a company’s earnings are growing, and how fast. The faster the earnings growth, the greater the potential stock price appreciation.
Financial Condition of Owned Companies
Financial statements are an easy way for shareholders to gauge the general condition of a company. Taken together, the statements provide a useful snapshot that allow investors to keep up with company financial decisions and mark increases in growth or changes in strategy.
The main documents of interest to shareholders will be the company’s annual report and accounts. Each shareholder has the right to receive these when they’re issued generally and on request. Shareholders also have the right to receive a copy of any written resolution proposed by either the directors or shareholders.
Why is it important for investors to have reliable financial information?
The purpose of making financial statements reliable is to provide accurate financial information for the user to use when making financial decisions. An investor wants to know that the net income reported accurately represents the company’s activities for the period.
Why do stakeholders need accounting information?
In fact, the purpose of accounting is to help stakeholders make better business decisions by providing them with financial information. … as the process of measuring and summarizing business activities, interpreting financial information, and communicating the results to management and other decision makers.
Why do investors need accounting information?
Investors use financial statements to obtain valuable information used in the valuation and credit analysis of companies. … Knowledge of accounting helps investors determine an assets’ value, understand a company’s financing sources, calculate profitability, and estimate risks embedded in a company’s balance sheet.
Shareholders invest capital to conduct the business. They are interested in the profitability, dividends, safety and market value of their holdings and long-term solvency of the business concern.
Shareholders play both direct and indirect roles in a company’s operations. They elect directors who appoint and supervise senior officers, including the chief executive officer and the chief financial officer. They play an indirect role through the stock market.
Shareholders are entitled to inspect the company’s financial books and records, including, but not limited to, financial statements, shareholder lists, corporate stock ledgers, and meeting minutes.
Companies are required to send a copy of its annual accounts and reports for each financial year to every shareholder of the company. … Shareholders are not however entitled to receive or inspect copies of general a company’s financial records.
Shareholders may inspect and copy any of the previously listed business records provided that written notice is given to the corporation at least five business days before the date they intend to inspect and copy.
Can shareholders inspect books of accounts? The members of the company are not vested with any such right to inspect the books of account anywhere specifically in the Companies Act, 2013. However, the articles of the company can provide for such right of inspection for its shareholders and the timing for it.