Case Analysis: The Annual Report Essay

1. The basic factors of communication that must be considered in the presentation of the one-year compensate argon compliance with accounting principles and regulations, accuracy of the randomness presented, and how frequently nurture you are passing game to disclose. The heed has a lot of get a line over what and how much reading it pauperisms to disclose to the users of their financial report. Users can be shareholders, investors, customers, or if you call for it or non, competitors. consequently management doesnt expect to disclose too much strategic details most their approaching plans. However, it also has to get future investors and therefore ineluctably to give them complete randomness somewhat the companies health. 2. One part of the yearly underwrite that is very interesting for investors is the Managements Discussion and Analysis function. It gives the user of the financial report more specific details close to how the smart set has through t hat year and contains information that cannot be found in the financial data. This section can include coverage over any favorable or unfavorable trends and any significant events or uncertainties in the areas of liquidity, capital resources, and results of trading operations (Ormiston, 2013).An other(a) section of the Annual Report is the Proxy Statement. It is required by the SEC and solicits shareholder votes as many shareholders dont be shareholder meetings. This section also contains voting procedures, background information about nominated directors, executive compensation, etc. This information helps investors and creditors by providing information about the longevity and compensation of the companies top management as well as corporate governance (Ormiston, 2013). 3. One advantage of stating well-defined corporate strategies in the Annual Report is to attract investors. Prospective investors in your company want to see that your company is healthy and that you are generati ng cash flows from operations. They want to endure if you are going to be able to pay out dividends. Therefore stating a well-defined outline for the future can possible attract more investors. Another advantage of stating your scheme is that current investors remain investment funds in your company when they see that your company has a bright future. Investors standardized to plan ahead and therefore want to know your corporate strategy in advance.A disfavour of stating well-defined strategies in the Annual Report is that you also disclosecritical information to your competitors. By doing so, your competitors know what your plans are and can try to position them better to compete with you. Another disadvantage of stating your corporate strategy in the Annual Report is that your customers might not like a change in your strategy and switch to your competitors. An framework for this might be deciding to outsource all manufacturing to China. This corporate strategy might outrage your customers and lead them away from your company. 4. The effectiveness of annual reports in fulfilling the information needs for current and potential shareholders is usually good because management tailors the Annual Report as much as possible to the needs of investors in order to attract more investment 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 musical composition giving the shareholder enough reclaimable information to make a decision.Creditors of the company find the cash flow from operations statement useful because it provides them with information about how much money the company is making to conciliate 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 suffer 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 reading the financial statements of the company where they buy products.However, if important information about the companys behaves 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 any(prenominal) 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 starchys prestige in the community.5. Manag ement knows when creating the Annual Report that competitors are going to analyze their strategy as well as shareholders and other users. Therefore it needs to be careful aboutwhat 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 find out of their company in the public.This report is intended to show the companies performance and compliance with environmental standards and ratings. Sustainability reportage started in the 1980s by companies in the chemical industry who had determi ne problems because of their negative impact on the environment. Nowadays, many companies use sustainability reports to improve inherent processes, persuade investors, and improve their image in the public. This information can be helpful to investors because it portrays transparency and accountability and assures the investor of a good public image of the company.ReferencesOrmiston, A., & Fraser, L. M. (2013). Financial Statements. Understanding financial statements(10th ed., p. 12). New York, NY Pearson Education.