Reference no: EM132485451

Question - Identify users and uses of financial statements

Financial decisions often place heavier emphasis on one type of financial statement over the others. Consider each of the following hypothetical situations independently.

a. North Sales Ltd is considering extending credit to a new customer. The terms of the credit would require the customer to pay within 30 days of receipt of goods.

b. An investor is considering purchasing shares in Giorgina's. The investor plans to hold the investment for at least 5 years.

c. Otago Bank is considering extending a loan to a small company. The company would be required to make interest payments at the end of each year for 5 years, and to repay the loan at the end of the fifth year.

d. The finance director of Pacific Pipes Ltd is trying to determine whether the company is generating enough cash to increase the amount of dividends paid to investors in this and future years, and still have enough cash to buy plant and machinery as needed.

Required - Although the decision makers should refer to all financial statements, for each situation, state whether the decision maker would be most likely to place the main emphasis on information.