FIN2603
Assignment 1 Semester 2 2025
Unique #:
Due Date: 20 August 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1
Financial statements are not only prepared for compliance but also serve as vital
tools for a wide range of stakeholders who depend on them to make informed
decisions.
These stakeholders include:
Shareholders
Shareholders are the legal owners of a company, and their main concern is the
profitability and sustainability of their investment. Financial statements allow them to
assess whether the company is generating sufficient returns, either through
dividends or capital growth. Since shareholders forego alternative investment
opportunities such as interest on savings or rental income, they rely on accurate
financial reports to evaluate whether the company is achieving its financial goals and
maximising their wealth.
Management
Management uses financial statements internally for decision-making, planning, and
control. By analysing profitability, liquidity, and operational efficiency, managers can
assess whether strategies are effective and make adjustments where necessary.
The information also supports long-term planning, ensuring the business remains
competitive and financially sound. Thus, financial statements are critical tools for
monitoring performance against objectives.
Varsity Cube 2025 +27 81 278 3372
Assignment 1 Semester 2 2025
Unique #:
Due Date: 20 August 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1
Financial statements are not only prepared for compliance but also serve as vital
tools for a wide range of stakeholders who depend on them to make informed
decisions.
These stakeholders include:
Shareholders
Shareholders are the legal owners of a company, and their main concern is the
profitability and sustainability of their investment. Financial statements allow them to
assess whether the company is generating sufficient returns, either through
dividends or capital growth. Since shareholders forego alternative investment
opportunities such as interest on savings or rental income, they rely on accurate
financial reports to evaluate whether the company is achieving its financial goals and
maximising their wealth.
Management
Management uses financial statements internally for decision-making, planning, and
control. By analysing profitability, liquidity, and operational efficiency, managers can
assess whether strategies are effective and make adjustments where necessary.
The information also supports long-term planning, ensuring the business remains
competitive and financially sound. Thus, financial statements are critical tools for
monitoring performance against objectives.
Varsity Cube 2025 +27 81 278 3372
