You have been approached to prepare an analysis of Timon Incorporated. Your clie
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Question
You have been approached to prepare an analysis of Timon Incorporated. Your clients represent four of Timon's stakeholder groups: 1. Short-term trade creditors; 2. Long-term creditors; 3. shareholders; and 4. the company managers. You are thinking about what each stakeholder group is looking for form your analysis. Write a brief note about each stakeholder group. Include in your answer a brief discussion on what each group wants and which of the four aspects of financial analysis provides the best information for each of the stakeholder groups.Explanation / Answer
SHORT-TERM TRADE CREDITORS (TRADE PAYABLES)
A trade payable is an amount billed to a company by its suppliers for goods delivered to or services consumed by the company in the ordinary course of business. These billed amounts, if paid on credit, are entered in the accounts payable module of a company's accounting software, after which they appear in the accounts payable aging report until they are paid. Any amounts owed to suppliers that are immediately paid in cash are not considered to be trade payables, since they are no longer a liability.
Trade payables are nearly always classified as current liabilities, since they are usually payable within one year. If that is not the case, then such payables can be classified as long-term liabilities. A longer-term liability typically has an interest payment associated with it, and so is more likely to be classified as long-term debt.
Short term creditors are interested in repayment of their debt during its short term. They will want to look at a company's current ratio, or quick ratio, to forecast both timely and complete repayment. Their interest ends when the invoice is paiD
TRADE PAYABLES REQUIRES FOR LIQUIDITY IN THE COMPANY.
LONG-TERM CREDITORS
Long- term creditors are always classified as long term liabilities since they are paid for more than 12 months. A longer-term liability typically has an interest payment associated with it, and so is more likely to be classified as long-term debt.
Long term creditors have a more complex view. In addition to making sure the short term ratios mentioned earlier indicate ability to repay, they will also be interested in long term generation of free cash flow, so their interest and debt can be repaid as anticipated. Their view is a longer one, which ends when the debt is repaid.
SHAREHOLDERS
Any person, company or other institution that owns at least one share of a company’s stock. Shareholders are a company's owners. They have the potential to profit if the company does well, but that comes with the potential to lose if the company does poorly. A shareholder may also be referred to as a "stockholder''.
Stockholders have an even more complex view. Not only are short term debt and long term debt components of their view, but as owners, they must be concerned with all the facets of a company's health. How the business will grow and thrive depends not only on managing debt, but the business itself. Are there risks in this business? Will the technology fade from importance (think pay telephones and stand alone GPS units). How is the business structured to take on new challenges? Owners will want to get information from complete financial statements to review their entire ownership.
COMPANY MANAGERS
The company manager is hired by the general manager of a theatrical or live stage production, and is primarily responsible for managing payroll for the cast and crew and numerous other logistical concerns. As the person who signs the paychecks, the company manager is very popular, though not always as well-loved as policy enforcer or bearer of a termination notice.
The best company managers are generalists who are highly detail-oriented, even nitpicky. This career requires an extensive academic education that may include theatrical management or arts administration.
Managers are required to constantly track employees and monitor their performance.
Read more: Shareholder Definition | Investopedia http://www.investopedia.com/terms/s/shareholder.asp#ixzz3uhaDq9yY
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