The textbook authors identify three different categories of people who read financial statements. Choose one category and provide examples of the types of information the person would be interested in. Explain why each type of information may be important to the person.

Must be a minimum of 350 words in length, and be supported with reference(s).

I have this so far but needs to be expanded on:

One category of people who read the financial statements are the "Investors".

The Investors refer to the retail public who have invested in the stock of the company. The investors would like to know how profitable their shares are in the long run. They (Investors) would be typically interest in these three ratios:

1. The Net Profit Margin (NPM) - It is the ratio of the net profit to the net sales and basically indicates as to how much profit the business is making. A higher net profit margin indicates that the business is doing well and they can continue to invest in the shares

2. The return on Equity (ROE) - It is the net income divided by the total shareholder equity. It shows as to how much return the investor makes when he stays invested in the company for the long term. A higher ratio would mean more profitable for the investor.

3. The Debt/Equity (D/E) ratio: The investors would look at how much debt the company has. A very large amount of debt is bad as the company may not be able to service it in time. So a lower D/E would be beneficial.