. “Managers do not need to rely on these ratios to the same extent as external stakeholders such as investors”. Discuss.

Managers- Managers of a company are mainly interested in its performance, since they are responsible for the daily duties carried out. They will, thus, be more interested in operating performance and turnover ratios, which enable them to compare the company's performance across different periods and against competitor companies.

Equity investors- Profitability is the main concern of equity investors. They aim to get maximum returns on their investments. They also seek to find out the ability of a company to pay them dividends. Essentially, they mostly use profitability ratios to find out how capable a company is in generating a good income (Schmidgall, 2003).

Long-term creditors- Since long-term creditors have long-term interest in the finances of a particular company; they hold solvency ratios in high regard (Schmidgall, 2003). Solvency ratios gauge an entity's ability to pay long-term debts and show the financial risks of the company, which make them useful to lenders as they require their long-term debts to be repaid in time.

Short-term creditors- These creditors are more concerned with the ability of the company to pay off the amounts that were lent to them. They are, therefore, more interested in the liquidity of the company. They emphasize on liquidity ratios, which gauge an entity's ability to meet its short-term obligations.