The Importance Of Financial Reporting
And Analysis: A User’s Guide
By Mona Lebied in Dashboarding, Jun 1st 2017
Financial reporting and analysis is one of the bedrocks of modern business. While you
may already know that financial reporting is important (at least because it’s legally
required in most countries), you may not know much beyond that. So, we designed
this blog post to answer the following questions:
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What is financial reporting?
Do all companies do it the same way?
Why is financial reporting important?
What are some use cases when it comes to making business decisions?
If you find the business of doing business interesting, or if you just want to upgrade
your knowledge on financial analysis and reporting, you’ve found the perfect blog post.
Exclusive Bonus Content: Get our cheat sheet on financial reporting
…and learn why financial analysis and reporting is so important!
What Is Financial Reporting?
Financial reporting is essentially a way of following standard practices to give the world
an accurate depiction of a company’s finances, including their:
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Revenues
Expenses
Profits
Capital
Cashflow
All of these financial KPIs are important, because they show the “health” of a company
– at least when it comes to money. Financial reports don’t show you much about a
company’s culture or management.
We’ll get into the use cases of financial analysis and reporting later on in this article,
but for now, it’s enough to know that these “financial health reports” are crucial for
anyone who wants to make informed decisions about a business. Such as investing
in said business, extending credit or seeing if it has good cashflow in the near term
future, and so on. Financial reporting and analysis is also legally required for tax
purposes.
As Boundless states, “Financial reporting is used by owners, managers, employees,
investors, institutions, government, and others to make important decisions about a
business.”
3 Common Financial Report Examples
1) Income Statement
This report tells you how much money a company made (or lost) in a given time period
(usually a fiscal year). It does so through showing you revenues earned and expenses
paid, with the ultimate goal of showing a company’s profit numbers.
** click to enlarge**
2) Balance sheet
This gives a snapshot of your assets and liabilities (aka debts) at a given moment in
time. It’s definitely possible to be in trouble with your profitability and cashflow
situations while having a healthy balance sheet – (especially if you have a lot of money
tied up in physical inventory).
** click to enlarge**
3) Cash Flow Statement
This report shows how much money went into and out of your business in a period of
time. The cash flow statement is crucial for things like making sure you have enough
money to make payroll.
** click to enlarge**
Different Ways of Financial Reporting and
Analysis
“In a perfect world, investors, board members, and executives would have full
confidence in companies’ financial statements…. Unfortunately, that’s not what
happens in the real world, for several reasons.”- Where Financial Reporting Still Falls
Short, The Harvard Business Review
We won’t get too deep into the “financial reporting rabbit hole” right now, but we can
say with certainty that there are many pitfalls associated with financial reporting. Some
of them are technical pitfalls, while others are ethical (Enron, anyone?). Right now, it’s
enough to understand that there are two main ways that financial reports are
standardized:
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The GAAP (Generally Accepted Accounting Principles). This is the system used by
the United States, and pretty much nobody else (just like the Imperial measurement
system!)
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The IFRS (International Financial Reporting Standards). This system is used by more
than 110 countries around the world, including Canada, Australia, India, and China
(although China and India have “customized” the IFRS in their own ways).
These differences have real-world consequences. As the HBR article states:
“Take the British confectionary company Cadbury. Just before it was acquired by the
U.S. firm Kraft, in 2009, it reported IFRS-based profits of $690 million.
Under GAAPthose profits totaled only $594 million — almost 14% lower. Similarly,
Cadbury’s GAAP -based return on equity was 9% — a full five percentage points lower
than it was under IFRS (14%). Such differences are large enough to change an
acquisition decision.”
Why Is Financial Reporting Important?
Let’s get down to brass tacks – what’s the point of financial reporting? There are three
main reasons:
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It is required by law for tax purposes.
Financial reporting gives investors, creditors, and other businesses an idea of the
financial integrity and creditworthiness of your company.
It gives you important information you can use to make business decisions – such as
whether you should open that new location or not.
Let’s dive into each of these reasons a bit more thoroughly.
Taxes
This is arguably the most important reason to use financial reports – because you
have to! The government uses these reports to make sure that you’re paying your fair
share of taxes. Frankly, if financial reports weren’t legally required, most companies
would probably use management dashboards instead (at least for internal decision
making).
As it is, the government’s requirements for these documents has created an entire
industry of auditing firms (like the “Big 4” of KPMG, Ernst & Young, Deloitte, and PWC)
that exist to independently review companies financial reports. This auditing process
is also a legal requirement.
For other companies, investors, shareholders, etc
If you’re considering investing money in a company, it only makes sense that you’ll
want to know how well that company is doing – and according to a standardized litmus
test, not measurements that a company made up to make themselves look good.
This is where financial reporting comes into play for investors. This also applies to
credit vendors and banks who are considering lending money to a company. In these
situations, you want to have an accurate understanding of how likely you are to be
paid back – so that you can charge interest accordingly. In this case it’s great to have
an investor relations dashboard at hand.
The importance of financial analysis and reporting is also for stakeholders. If you own
equity in a firm, or if you are an activist investor who owns a major equity position, you
want to have full disclosure of all assets, liabilities, use of cash, revenues, and costs
that a company has.You also want to understand if the company is doing something it
shouldn’t, (such as in the case of Enron).
Due to a series of laws known as Sarbanes-Oxley, there is more standardization/legal
cooperation within the world of financial reporting. These laws are designed to prevent
another situation like Enron from happening.
For internal decision-making
As we said earlier, financial reports are frankly not the best tools for making internal
business decisions. However, they can serve as the “bedrock” for other reports (such
as management reports) that CAN and SHOULD be used to make decisions.
As such, it’s crucial that financial reports are as accurate as possible, because
otherwise any management reports (and ensuing decisions) based off them will be
based on a shaky foundation. This is where companies can run into trouble using
legacy methods of doing financial reports (such as using one massive spreadsheet
that multiple users have access to) and where they could see benefits from
using financial dashboardsinstead.
These dashboards can provide at a glance information on the financial health of your
company, for both yourself and others. Remember: the government (and outside
investors) don’t care WHY your financial reports are inaccurate. They’ll just penalize
you for being wrong.
Use-Cases For Financial Reporting
Up until this point, we’ve been pretty general, looking at things from the big picture
point of view. Now let’s get a little more tangible and down to earth with some valuable
questions that financial reports (and the reports based off them) can help you answer.
Is purchasing this stock a good idea?
If you’re really doing your due diligence on a company that you’re considering investing
in as an individual or on behalf of your company, financial reports can give you some
(relatively) “hard” data you can use to make your decision.
This is also one way you can gain insight into if a company is potentially under or over
priced in the stock market.
Are we profitable? Will we be in the future?
Without financial analysis and reporting, it’s difficult to tell how much money your
company is making after paying all of your expenses and payroll. Since one of the
main reasons a company exists is to make profits for itself and/or its shareholders, this
is pretty crucial information.
How much cash “runway” do we currently possess?
If you’ve ever been a part the management team of a startup, you might have some
idea of how stressful it can be to not know if you’re going to be able to “make payroll”
or not in the coming months.
Cash is oxygen to a business, where financial reporting and analysis can help you see
how many months’ payroll your business can give out while remaining financially
solvent, (assuming that revenue numbers stay the same).
This is a good “worst case scenario” exercise to do regularly – and it’s even more
sturdy if you assume that your revenues will fall over the next few months compared
to your best guess projections.
Do we have capital to invest in new lines of business?
Some companies, like Apple, like to sit on massive amounts of cash. Their strategy is
to have this money built up so that they can remain financially solvent even if some
pretty catastrophic things happen to the economy.
However, other companies like to invest their money if they can do so while remaining
financially healthy. For example, computer chipset manufacturers like Intel upgrade
their factories and equipment on a regular basis.
These upgrades are extremely expensive, and while they are a good long-term
decision, the company in question must make sure they have the short term cashflow
to support these kinds of moves.
Exclusive Bonus Content: Get our cheat sheet on financial reporting
…and learn why financial analysis and reporting is so important!
Like it or not, financial reporting will be around as long as businesses are making and
spending money, for the simple reason that governments will always collect taxes from
businesses. As they say, taxes are one of the few certainties in life. While you may not
be able to choose if you prepare financial reports or not, you can at least
choose howyou present them. And with financial dashboards, you can see your
company’s financial integrity at a moment’s notice.
To onboard your business on the reporting plane, you can start a free trial and benefit
from all the advantages datapine’s solution provides you with!
Financial analysis is an aspect of the overall business finance function that involves
examining historical data to gain information about the current and future financial
health of a company. Financial analysis can be applied in a wide variety of situations
to give business managers the information they need to make critical decisions. The
ability to understand financial data is essential for any business manager. Finance is
the language of business. Business goals and objectives are set in financial terms
and their outcomes are measured in financial terms. Among the skills required to
understand and manage a business is fluency in the language of finance—the ability
to read and understand financial data as well as present information in the form of
financial reports.
The finance function in business involves evaluating economic trends, setting
financial policy, and creating long-range plans for business activities. It also involves
applying a system of internal controls for the handling of cash, the recognition of
sales, the disbursement of expenses, the valuation of inventory, and the approval of
capital expenditures. In addition, the finance function reports on these internal
control systems through the preparation of financial statements, such as income
statements, balance sheets, and cash flow statements.
Finally, finance involves analyzing the data contained in financial statements in order
to provide valuable information for management decisions. In this way, financial
analysis is only one part of the overall function of finance, but it is a very important
one. A company's accounts and statements contain a great deal of information.
Discovering the full meaning contained in the statements is at the heart of financial
analysis. Understanding how accounts relate to one another is part of financial
analysis. Another part of financial analysis involves using the numerical data
contained in company statements to uncover patterns of activity that may not be
apparent on the surface.
DOCUMENTS USED IN FINANCIAL ANALYSIS
The three main sources of data for financial analysis are a company's balance sheet,
income statement, and cash flow statement.
Balance Sheet
The balance sheet outlines the financial and physical resources that a company has
available for business activities in the future. It is important to note, however, that the
balance sheet only lists these resources, and makes no judgment about how well
they will be used by management. For this reason, the balance sheet is more useful
in analyzing a company's current financial position than its expected performance.
The main elements of the balance sheet are assets and liabilities. Assets generally
include both current assets (cash or equivalents that will be converted to cash within
one year, such as accounts receivable, inventory, and prepaid expenses) and
noncurrent assets (assets that are held for more than one year and are used in
running the business, including fixed assets like property, plant, and equipment;
long-term investments; and intangible assets like patents, copyrights, and goodwill).
Both the total amount of assets and the makeup of asset accounts are of interest to
financial analysts.
The balance sheet also includes two categories of liabilities, current liabilities (debts
that will come due within one year, such as accounts payable, short-term loans, and
taxes) and long-term debts (debts that are due more than one year from the date of
the statement). Liabilities are important to financial analysts because businesses
have same obligation to pay their bills regularly as individuals, while business
income tends to be less certain. Long-term liabilities are less important to analysts,
since they lack the urgency of short-term debts, though their presence does indicate
that a company is strong enough to be allowed to borrow money.
Income Statement
In contrast to the balance sheet, the income statement provides information about a
company's performance over a certain period of time. Although it does not reveal
much about the company's current financial condition, it does provide indications of
its future viability. The main elements of the income statement are revenues earned,
expenses incurred, and net profit or loss. Revenues consist mainly of sales, though
financial analysts may also note the inclusion of royalties, interest, and extraordinary
items. Likewise, operating expenses usually consists primarily of the cost of goods
sold, but can also include some unusual items. Net income is the "bottom line" of the
income statement. This figure is the main indicator of a company's accomplishments
over the statement period.
Cash Flow Statement
The cash flow statement is similar to the income statement in that it records a
company's performance over a specified period of time. The difference between the
two is that the income statement also takes into account some non-cash accounting
items such as depreciation. The cash flow statement strips away all of this and
shows exactly how much actual money the company has generated. Cash flow
statements show how companies have performed in managing inflows and outflows
of cash. It provides a sharper picture of a company's ability to pay bills, creditors, and
finance growth better than any other one financial statement.
ELEMENTS OF FINANCIAL HEALTH
A company's overall financial health can be assessed by examining three major
factors: its liquidity, leverage, and profitability. All three of these factors are internal
measures that are largely within the control of a company's management. It is
important to note, however, that they may also be affected by other conditions—such
as overall trends in the economy—that are beyond management's control.
Liquidity
Liquidity refers to a company's ability to pay its current bills and expenses. In other
words, liquidity relates to the availability of cash and other assets to cover accounts
payable, short-term debt, and other liabilities. All small businesses require a certain
degree of liquidity in order to pay their bills on time, though start-up and very young
companies are often not very liquid. In mature companies, low levels of liquidity can
indicate poor management or a need for additional capital. Of course, any company's
liquidity may vary due to seasonal variations, the timing of sales, and the state of the
economy.
Companies tend to run into problems with liquidity because cash outflows are not
flexible, while income is often uncertain. Creditors expect their money when
promised, and employees expect regular paychecks. However, the cash coming in to
a business does not often follow a set schedule. Sales volumes fluctuate as do
collections from customers. Because of this difference between cash generation and
cash payments, businesses should maintain a certain ratio of current assets to
current liabilities in order to ensure adequate liquidity.
Leverage
Leverage refers to the proportion of a company's capital that has been contributed by
investors as compared to creditors. In other words, leverage is the extent to which a
company has depended upon borrowing to finance its operations A company that
has a high proportion of debt in relation to its equity would be considered highly
leveraged. Leverage is an important aspect of financial analysis because it is
reviewed closely by both bankers and investors. A high leverage ratio may increase
a company's exposure to risk and business downturns, but along with this higher risk
also comes the potential for higher returns.
Profitability
Profitability refers to management's performance in using the resources of a
business. Many measures of profitability involve calculating the financial return that
the company earns on the money that has been invested. Most entrepreneurs
decide to start their own businesses in order to earn a better return on their money
than would be available through a bank or other low-risk investments. If profitability
measures demonstrate that this is not occurring—particularly once a small business
has moved beyond the start-up phase—then the entrepreneur should consider
selling the business and reinvesting his or her money elsewhere. However, it is
important to note that many factors can influence profitability measures, including
changes in price, volume, or expenses, as well the purchase of assets or the
borrowing of money.
PERFORMING ANALYSES WITH FINANCIAL RATIOS
Measuring the liquidity, leverage, and profitability of a company is not a matter of
how many dollars the company has in the form of assets, liabilities, and equity. The
key is the proportions in which such items occur in relation to one another. A
company is analyzed by looking at ratios rather than just dollar amounts. Financial
ratios are determined by dividing one number by another, and are usually expressed
as a percentage. They enable business owners to examine the relationships
between seemingly unrelated items and thus gain useful information for decisionmaking. Financial ratios are simple to calculate, easy to use, and provide a wealth of
information that cannot be gotten anywhere else. Ratios are tools that aid judgment
and cannot take the place of experience. They do not replace good management,
but they can make a good manager better.
Virtually any financial statistics can be compared using a ratio. Small business
owners and managers only need to be concerned with a small set of ratios in order
to identify where improvements are needed. Determining which ratios to compute
depends on the type of business, the age of the business, the point in the business
cycle, and any specific information sought. For example, if a small business depends
on a large number of fixed assets, ratios that measure how efficiently these assets
are being used may be the most significant.
There are a few general ratios that can be very useful in an overall financial analysis.
To assess a company's liquidity, analysts recommend using the current, quick, and
liquidity ratios. The current ratio can be defined as Current Assets/Current Liabilities.
It measures the ability of an entity to pay its near-term obligations. Though the ideal
current ratio depends to some extent on the type of business, a general rule of
thumb is that it should be at least 2:1. A lower current ratio means that the company
may not be able to pay its bills on time, while a higher ratio means that the company
has money in cash or safe investments that could be put to better use in the
business.
The quick ratio, also known as the "acid test," can be defined as Quick Assets (cash,
marketable securities, and receivables) / Current Liabilities. This ratio provides a
stricter definition of the company's ability to make payments on current obligations.
Ideally, this ratio should be 1:1. If it is higher, the company may keep too much cash
on hand or have a poor collection program for accounts receivable. If it is lower, it
may indicate that the company relies too heavily on inventory to meet its obligations.
The liquidity ratio, also known as the cash ratio, can be defined as Cash/Current
Liabilities. This measure eliminates all current assets except cash from the
calculation of liquidity.
To measure a company's leverage, the debt/equity ratio is the appropriate tool.
Defined as Debt / Owners' Equity, this ratio indicates the relative mix of the
company's investor-supplied capital. A company is generally considered safer if it
has a low debt to equity ratio—that is, a higher proportion of owner-supplied
capital—though a very low ratio can indicate excessive caution. In general, debt
should be between 50 and 80 percent of equity.
Finally, to measure a company's level of profitability, analysts recommend using the
return on equity (ROE) ratio, which can be defined as Net Income/Owners' Equity.
This ratio indicates how well the company is utilizing its equity investment. ROE is
considered to be one of the best indicators of profitability. It is also a good figure to
compare against competitors or an industry average. Experts suggest that
companies usually need at least 10-14 percent ROE in order to fund future growth. If
this ratio is too low, it can indicate poor management performance or a highly
conservative business approach. On the other hand, a high ROE can mean that
management is doing a good job, or that the firm is undercapitalized.
In conclusion, financial analysis can be an important tool for small business owners
and managers to measure their progress toward reaching company goals, as well as
toward competing with larger companies within an industry. When performed
regularly over time, financial analysis can also help small businesses recognize and
adapt to trends affecting their operations. It is also important for small business
owners to understand and use financial analysis because it provides one of the main
measures of a company's success from the perspective of bankers, investors, and
outside analysts.
What is Financial Statement Analysis
Financial statement analysis is the process of analyzing a company's financial
statements for decision-making purposes and to understand the overall health
of an organization. Financial statements record financial data, which must be
evaluated through financial statement analysis to become more useful to
investors, shareholders, managers, and other interested parties.
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Financial Statement Analysis
BREAKING DOWN Financial Statement Analysis
Financial statement analysis is an evaluative method of determining the past,
current, and projected performance of a company. Several techniques are
commonly used as part of financial statement analysis including horizontal
analysis, which compares two or more years of financial data in both dollar
and percentage form; vertical analysis, in which each category of accounts on
the balance sheet is shown as a percentage of the total account; and ratio
analysis, which calculates statistical relationships between data.
Financial Statements
Financial statement analysis allows analysts to identify trends by comparing
ratios across multiple periods and statement types. These statements allow
analysts to measure liquidity, profitability, company-wide efficiency, and cash
flow. There are three main types of financial statements: the balance sheet,
income statement and cash flow statement. The balance sheet is a snapshot
of the company's assets, liabilities, and shareholders' equity at a specific
period. Analysts use the balance sheet to analyze trends in assets and debts.
The income statement begins with sales and ends with net income. It also
provides analysts with the gross profit, operating profit, and net profit. Each of
these is divided by sales to determine gross profit margin, operating profit
margin, and net profit margin, respectively. The cash flow statement provides
an overview of the company's cash flows from operating activities, investing
activities, and financing activities.
Financial Statement Analysis
Each financial statement provides multiple years of data. Used together,
analysts track performance measures across financial statements using
several different methods for financial statement analysis, including vertical,
horizontal, and ratio analyses. An example of vertical analysis is when each
line item on the financial statement is listed as a percentage of another.
Horizontal analysis compares line items in each financial statement against
previous time periods. In ratio analysis, line items from one financial statement
are compared with line items from another. For example, many analysts like to
know how many times a company can pay off debt with current earnings.
Analysts do this by dividing debt, which comes from the balance sheet, by net
income, which comes from the income statement. Likewise, return on assets
(ROA) and the return on equity (ROE) compare company net income found on
the income statement with assets and stockholders' equity found on the
balance sheet.
Analysis of Financial Statement:
Need, Objectives and Requisites
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Let us make an in-depth study of Analysis of Financial Statement.
After reading this article you will learn about: 1. Need of Analysis of
Financial Statement 2. Objectives of Analysis of Financial Statement
3. Requisites 4. Steps Involved 5. Parties Interested.
Need of Analysis of Financial Statement:
We know that the analysis of financial statement helps the analyst
to know the financial information from the financial data contained
in the financial statements and to assess the financial health (i.e.
strength or weakness) of an enterprise. It also helps to make a
forecast for the future which helps us to prepare budgets and
estimates.
In short, analysis of financial statements helps us to take various
decisions at various places of a firm.
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However, we highlight below the purpose or need of the
said analysis:
(a) It helps us to know the reasons for relative changes—either in
profitability or in the financial position as a whole.
(b) It also help to know both the short-term liquidity position vis-avis working capital position; as also the long-term liquidity and
solvency position of a firm.
(c) It also highlights the operating efficiency and the present profitearning capacity of the firm as a whole.
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(d) High Courts, Supreme Court, Arbitrators also require financial
statements to settle various disputed matters.
(e) Various financial journal (viz. R.B.I. Bulletins), newspapers etc.
also require financial statements for analysing and scrutinizing the
financial position of a firm for the readers.
Objectives of Analysis of Financial Statement:
It has already been pointed out above that financial statements are
used by various interested parties for their various purposes.
However, the significant objectives of financial statement
analysis are:
(a) To ascertain short-term liquidity position of an enterprise by the
application of various liquidity ratios.
(b) To evaluate the long-term solvency position by the application of
various solvency ratios;
(c) To assess the risk (both financial as well as business) involved
with firm.
(d) To assess the present earning capacity of the firm for the
purpose of inter-firm comparison and thereby to assess the progress
or otherwise of the firm.
(e) To evaluate the efficiency of the firm for proper utilisation of
financial resources.
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(f) To assess the intra-firm comparison among of the various
components of the firm.
(g) To see the effect of various non-economic and economic factors
of the firm.
(h) To assess the working capital position of the firm.
(i) To assess the performance of the firm by the application of
various ratios.
Requisites of Analysis of Financial Statement:
We know that financial statements are analysed by the analyst or
users of financial statement for specific purpose and also for general
purpose.
However, one should remember the following requisites
and procedures for the purpose of analysis of financial
statements:
(a) At first, the analyst must be clear relating to the
purpose/objectives of the analysis. According to his needs, he
should collect the required information.
(b) The analyst must go through the accounting principle,
conventions and concepts before starting his work.
(c) Application of technique must be correct. The analyst may follow
one technique for one type of analysis while the other technique for
other type of analysis.
(d) The analyst must determine the extent of analysis which will
help him to make necessary plan and programmes and accordingly
he should start his work.
(e) The data so collected from financial statements must be
presented in an understandable manner for which the grouping, regrouping, sub-grouping of data must be made.
(f) The analyst must highlight information in order of importance,
i.e. the more important points at the top and the least important
points at the bottom.
(g) The analyst must also ascertain the financial, operational as well
as structural relationship among the various elements of financial
statements.
(h) After completing the analytical work and interpretation, the
analyst must prepare a report which will be submitted to the
management or users of accounting information.
Steps Involved in Analysis of Financial Statement:
The analysis of financial statement needs:
(a) Methodical Classification (A conventional Prerequisites to
Analysis of Financial Statement)
(b) Tools of Financial Statement Analysis
(a) Methodical Classification:
We know that financial statements are prepared usually in a
traditional form which do not exhibit the information required by
an analyst. Thus, an analyst rearranges the data and presents and
prepares the same in a modified form for making proper
interpretation and analysis.
The said data are modified in a vertical form for a particular
purpose. This modified form of the financial statement is not a
compulsory requirement but only as a matter of convenience for
understanding and analysis. That is why, there is no standard form
of its presentation which should be applied in all the cases. The
financial statements used may also be prepared without
modification; in that case, we cannot use them conveniently.
While in case of methodical presentation, the information may be
presented side by side for the purpose of making proper comparison
and understanding. We have already shown the methodical
presentation of Income Statement and the methodical presentation
of Balance Sheet with the help of illustrations in earlier part of the
present chapter. In order to avoid repetition, the same is not
explained here.
(b) Tools of Financial Statement Analysis:
The tools of financial statements are presented:
Before explaining the tools we must remember that application of a
single tool is not at all sufficient to assess the financial position of
an enterprise. As such, a combination of some tools should be
applied in order to assess the financial position. For example, if an
analyst desires to assess the liquidity position of a firm, he must
consider the ratio analysis (i.e. liquidity ratios) along with the Cash
Flow Analysis, Funds Flow Analysis, and Working Capital Analysis
etc. This will, no doubt, help him to assess the liquidity position of a
firm.
Thus, the tools of financial statement analysis are:
(i) Comparative Statement;
(ii) Common-Size Statement;
(iii) Trend Analysis;
(iv) Working Capital Analysis;
(v) Funds Flow Analysis;
(vi) Cash Flow Analysis;
(vii) Ratio Analysis;
(viii) Cost-Volume Profit (CVP)/Break-Even Analysis.
Parties Interested in Analysis of Financial Statement:
People in various walks of life need financial information for various
purposes which are supplied by the financial statements.
Some of the groups who use the information are: