Financial accounting is similar to a giant, complex portrait painted by the organization. One investor might prefer to focus on a particular portion of the data almost exclusively. Another investor may believe that entirely different information is most significant. The desire to analyze a company’s financial situation is not limited to investors in the stock market. The same financial data utilized by investors buying or selling stock will also be of benefit to current and potential creditors. Ultimately, creditors attempt to anticipate the organization’s cash flows to measure the risk that debt principal and interest payments might not be forthcoming when debt need to be paid.
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