Why do shareholders want accounting information?

Shareholders want to see if they are getting a satisfactory return on their investment.

The correct answer is option 1- Shareholders want to see if they are getting a satisfactory return on their investment.

Option 2 is related to creditors not shareholders.
Option 3 is related to prospective investors not shareholders.
Option 4 is related to directors not shareholders.

• The owners/shareholders use them to see if they are getting a satisfactory return on their investment, and to assess the financial health of their company/business.
• The directors/managers use them for making both internal and external comparisons in their attempts to evaluate the performance. They may compare the financial analysis of their company with the industry figures in order to ascertain the company’s strengths and weaknesses. Management is also concerned with ensuring that the money invested in the company/organisation is generating an adequate return and that the company/organisation is able to pay its debts and remain solvent.
• The creditors (lenders) want to know if they are likely to get paid and look particularly at liquidity, which is the ability of the company/organisation to pay its debts as they become due.
• The prospective investors use them to assess whether or not to invest their money in the company/organisation.