A Business Plan - Crucial Tool for an Investor

A business plan is a very crucial tool for an investor to look at when they are considering market opportunities. The investors need to be sure that they would want to actually invest within a specific business and if they do they need to be sure that they don't invest more in to the business than what the investment is actually worth. Assets will show what a company both owns and owes which determines what type of return could be made on an investment. Annual reports of a company can give investors advantage of knowing when company stocks are doing very well or if it's a good time for them to sell. The cash or cash equivalents that show on these reports will show the overall structure of the company. The investors will be able to see how much is where, actual dollar amounts, as well as what has increased or decreased within the specific time period of these reports. Even though investors will look at all of this different information net earnings will be one of the biggest things investors will be looking at for their decisions, because this is what is considered to be the company's bottom line. The net revenue, expenses, and income will show an investor if this company is profitable enough for the investment that they are considering.

Creditors will use the information from financial statements and annual reports to both review and assess the business. A business will need financial assistance in order to maintain the expenses that come along with running a company and in order to do so they will need credit. A business can use their statements and reports to show credit worthiness in order to get credit faster or get more credit all together. The creditors will look at cash, what is processed through both accounts payable and receivable, the company's debt, revenue, and all over income in order to decide what type of credit the business may need, the amount of credit a business may need, and for specific lengths of time it may be extended. All of this information is going to show a creditor whether a business is in good standing enough to be able to pay back any given amount of credit that a creditor may provide.