Response to DQ1 and DQ2 Different Financial Information Users and Isolation

The lenders of corporations rely on the financial information released by public and private corporations in order to make decisions whether or not to give credit to business entities. For example a corporation may use the balance sheet of a firm to perform ratio analysis in order to determine the liquidity position of the firm (Weygandt Kieso Kimmel, 2002). If a company fails to meet the required performance standards of the bank the bank will deny credit. For instance if the current ratio of a company is below 1.0 banks typically deny credit. In your response you mention that investors make buy or sell decisions based on the financial statements released by public entities. Along with the annual report which includes the financial statements for a fiscal year public companies also