Lenders, Investors, and Management Are Three Potential Users of External

question 42

Essay

Lenders, investors, and management are three potential users of external financial statements. Discuss how the information found in external financial statements can benefit each of these external users.

---

Definitions:

Elastic

A characteristic of supply or demand that indicates a high sensitivity to changes in price.

Inelastic

Describes a situation where a change in price leads to a relatively small change in the quantity demanded or supplied.

Market Efficiency

A scenario where all existing information is entirely accounted for in the prices of assets, rendering it impossible to consistently outperform the market average in terms of returns.

Government

An organized system that establishes rules and regulations, governs, and provides services to its constituents.