Page 294 - Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies Section 5 Financial information and decisions

■ Trade payables – many goods and services supplied to a business are on a credit

basis. The supplier will want to know that the business has sufficient cash to pay its
debts when they become due. They will be interested in the liquidity of the business.
Suppliers will also be interested in the profitability of a business. A business which
is making good profits and expanding will continue to need raw materials and other
supplies. This will help suppliers to increase their own revenue and profits.
■ Lenders – banks and other lenders will want to know that they will receive the
interest on any money they have loaned the business and that the business will
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be able to repay its borrowing when it becomes due. For these reasons they will
Each stakeholder group will want
to know diff erent information. interested in the profits and liquidity of the business.
You will need to be able to ■ Government – companies have to pay tax on their profits. The higher the profits,
explain how each group would the higher the tax revenue received by the government. Also, a business which is
use the accounts. Remember too
performing well and earning profits to expand will provide employment. This will
that not all the information the
reduce government spending on support for the unemployed.
stakeholders want will be in the
accounts. ■ Customers – they want to know that a business will continue to supply them with
goods and services which meet their needs and wants. Businesses may use some of
their profit to invest in new technology which improves the quality of products and
might even lower prices.

ACTIVITY 23.7

Copy out the table below.

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Stakeholder Stakeholder objective Interested in: Reason
1 Shareholders 1 Dividends Profit The level of dividends paid to shareholders is
usually linked to the level of profit, for example
high profits = high dividends.
2 Increase market value of Profit High profits will usually increase the market
shareholding value of shares. Shareholders might then sell
their shares at a higher price than they paid
for them.
2 Employees
3 Lenders

4
5
6

1 Complete the table for employees and lenders. (Identify two objectives for each stakeholder.)
2 Add three more stakeholders and complete the table for each.
You might find it useful to review the topic of stakeholder objectives in Chapter 5 before attempting this question.