'Case Analysis: The Annual Report Essay\r'

'1. The basic factors of communication that must be considered in the presentation of the Annual brood are contour with accounting principles and regulations, accuracy of the nurture presented, and how untold education you are going to transgress. The management has a cluster of control over what and how such(prenominal) reading it necessitys to disclose to the users of their financial continue. Users displace be shareowners, investors, customers, or if you necessity it or non, rivals. Therefore management doesn’t inadequacy to disclose too much strategic lucubrate astir(predicate) their future plans. However, it withal has to attract potential investors and therefore involve to give them overflowing information nearly the companies’ health. 2. One part of the Annual state that is very interesting for investors is the trouble’s treatment and Analysis section. It gives the user of the financial report to a greater extent specific details about how the community has through that year and contains information that cannot be found in the financial data. This section can include reportage over any favorable or reproving trends and any significant events or uncertainties in the areas of liquidity, keen resources, and results of operations (Ormiston, 2013).\r\nAn otherwise section of the Annual extend is the Proxy Statement. It is required by the SEC and solicits shareholder votes as many shareholders don’t ascertain shareholder meetings. This section also contains voting procedures, mise en scene information about nominated directors, executive compensation, etcetera This information helps investors and creditors by providing information about the senior status and compensation of the companies’ top management as easy as corporate governance (Ormiston, 2013). 3. One reward of stating well-defined corporate strategies in the Annual say is to attract investors. Prospective investors in your smart set deficiency to see that your ac high society is healthy and that you are generating exchange flows from operations. They want to pick out if you are going to be able to put up out dividends. Therefore stating a well-defined outline for the future can workable attract more investors. Another advantage of stating your dodging is that current investors remain investing in your fraternity when they see that your company has a bright future. Investors give care to plan ahead and therefore want to spot your corporate system in advance.\r\nA mischief of stating well-defined strategies in the Annual proclaim is that you also disclose critical information to your competitors. By doing so, your competitors know what your plans are and can try to slur them wear to compete with you. Another disadvantage of stating your corporate strategy in the Annual get across is that your customers index not like a change in your strategy and switch to your competitors. An ex angstrom u nitle for this might be decision making to outsource all manufacturing to China. This corporate strategy might outrage your customers and lead them away from your company. 4. The trenchantness of yearly reports in fulfilling the information needs for current and electromotive force shareholders is usually good because management tailors the Annual fib as much as possible to the needs of investors in arrange to attract more enthronization into its company. Items like the MD&A or Pandora, which includes additional material to attract current and prospective investors, are specifically designed to attract more investment while giving the shareholder enough useful information to make a decision.\r\nCreditors of the company convalesce the cash flow from operations bidding useful because it endures them with information about how much specie the company is making to determine their ability to pay their debt back to you. For most employees of the company the Annual Report is probably hard to read and understand because of the complexity and volume of information that it contains. They would most likely brave from information overload and therefore the Annual Report is in my opinion not very effective in fulfilling their information needs. Most customers of a company are not going to be much interested in interpretation the financial statements of the company where they buy products.\r\nHowever, if important information about the company’s practices leaks to the public, the customers may switch to a competitor if they strongly disagree with said practice or strategy. Financial Analysts are probably going to find the information disclosed in the Annual Report very effective because they are used to reading these reports and know where to find useful information. However, because management has roughly control over what information to disclose or not to disclose, there is also some hard-to-find or missing information for Financial Analysts. This information can be employer relations with management, morale and efficiency of employees, or the firm’s prestige in the community.\r\n5. Management knows when creating the Annual Report that competitors are going to dismember their strategy as well as shareholders and other users. Therefore it needs to be careful about what information they want to disclose. The dilemma here is that you want to disclose enough information in order to attract investments, but cannot disclose too much information because otherwise your competitors are going to position themselves against you. This dilemma affects the decision about what information managers provide in their annual reports. 6. The sustainability report gives information about the environmental, social, and governance performance of a company and is a non-financial report. Many companies utilize this report to create a better image of their company in the public.\r\nThis report is intended to show the companies’ perform ance and compliance with environmental standards and ratings. Sustainability reporting started in the 1980s by companies in the chemical industry who had image problems because of their negative affect on the environment. Nowadays, many companies use sustainability reports to improve interior processes, persuade investors, and improve their image in the public. This information can be helpful to investors because it portrays transparency and obligation and assures the investor of a good public image of the company.\r\nReferences\r\nOrmiston, A., & Fraser, L. M. (2013). Financial Statements. Understanding financial statements\r\n(10th ed., p. 12). New York, NY: Pearson Education.\r\n'