14.3 External Uses of Financial Statements and Industry Averages
Once financial statements are made public, financial analysts begin their external analysis of the company. Why do they have such a keen interest in the performance of a company? Why should a company’s finance manager be concerned with how external analysts view the company? Remember the opening comment in Chapter 1 about financial management and the field of finance. Finance is about making decisions: what to buy and what to sell, and when to buy and when to sell. Financial analysts provide recommendations to their clients about what company to buy (invest) and what company to sell (divest). Such recommendations have a direct effect on the finance manager because they ultimately ...
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