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Resources of Managing Financial

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Decision Making
Information needs of different decision makers
There are different types of parties interested in the information of the organization. According to their level of interest and the power they can be divided in to internal parties and the external parties. The information needs of them also differ according to their needs. Owners/ Shareholders: They can be categorized as internal parties and their information needed for decision making are listed below. • Profitability of the company • Profit attributable to shareholders • Organizations asset base/ payables or net worth • Availability of cash for future expansions Employees Employees are also internal parties but their purpose of getting the information about the organization is different compared to the owners’ interest. Employees are mainly concerned about their salaries and other benefits from the employment and the continuity of the business for the security of their work. They are interested in following financial information.
• •

Profitability of the company Future expansion Plans

External Parties includes  Lenders/ banks  Government/ regulatory institutions  Public/ customers Lenders: Lenders/ Banks seek more information about the company when lending money for them to expand or for operations. Usually banks look for following information; • Gearing ratio of the company(Ratio between the equity capital and loan capital) • Profitability • Liquidity of the company • Interest cover (Ability to pay interest if the loans are taken) • Fixed assets base to get the information about the securities available for the loan etc Government/ Regulatory institutions • Profit earned to asses the income tax payable. • Other taxes payable amounts • Compliance with the regulatory bodies’ regulations (accounting standards, Colombo stock exchange requirements etc.) General Public/ customers: They are

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