Financial statements are useful to various parties interested in the affairs of an undertaking in the following ways:

For Shareholders: Financial statements report the performance of the management to the shareholders and help them understand the gaps between management performance and ownership expectations. They provide information about the status, safety and return on their investment, enabling shareholders to take decisions about continuation or discontinuation of their investment in the business.

For Government: Financial statements serve as a basis for fiscal policies, particularly taxation policies of the government. They provide basic input for industrial, taxation and other economic policies of the government related to the financial performance of corporate undertakings.

For Trade Associations: Trade associations analyse financial statements for providing service and protection to their members. They may develop standard ratios and design uniform system of accounts based on these statements.

For Stock Exchanges: Financial statements help stock exchanges understand the extent of transparency in reporting on financial performance. They enable stock brokers to judge the financial position of different concerns and take decisions about the prices to be quoted, thus protecting the interest of investors.