Is a bank considered an internal or external user of a business's financial information?

A bank is classified as an external user of a business's financial information. External users are individuals or entities that do not have direct access to the day-to-day operations of the business and rely on financial statements and reports to evaluate the company's financial health and performance.

Banks use financial information to assess the creditworthiness of a business when considering loan applications or evaluating existing loans. This information helps the bank in making informed decisions about lending, which is crucial for managing risk and ensuring that the business will be able to meet its financial obligations.

In contrast, internal users include management and employees who have direct access to detailed financial information used for decision-making and operational purposes within the organization. The classification of users as internal or external is based on their relationship to the business and their access to financial data. Therefore, the bank being an external entity makes it reliant on the financial reports provided by the business.