Case Analysis: The Annual Report Essay

1. The basic factors of communication that must be considered in the presentation of the one-year spread abroad atomic number 18 compliance with accounting principles and regulations, accuracy of the nurture presented, and how oft tuition you are going to disclose. The management has a lot of control over what and how a good deal information it wants to disclose to the users of their financial bailiwick. Users can be shareholders, investors, customers, or if you want it or not, competitors. indeed management doesnt want to disclose too much strategic details nigh their future plans. However, it also has to pull in prospective investors and therefore needs to give them enough information around the companies health. 2. One part of the yearly typography that is very interesting for investors is the Managements Discussion and Analysis section. It gives the user of the financial report more than specific details about how the caller-out has done that year and contains info rmation that cannot be raise 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 operations (Ormiston, 2013).Another section of the yearbook Report is the Proxy Statement. It is required by the SEC and solicits shareholder votes as many shareholders dont attend shareholder meetings. This section also contains voting procedures, background information about nominated directors, decision maker compensation, etc. This information helps investors and creditors by providing information about the longevity and compensation of the companies top management as well as corporeal governance (Ormiston, 2013). 3. One proceeds of stating well-defined corporate strategies in the Annual Report is to attract investors. Prospective investors in your partnership want to see that your company is healthy and that you are generating cash flows from o perations. They want to know if you are going to be able to pay out dividends. Therefore stating a well-defined dodging for the future can doable attract more investors. Another advantage of stating your strategy is that veritable investors remain investing in your company when they see that your company has a fresh future. Investors like to plan ahead and therefore want to know your corporate strategy in advance.A disadvantage 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 bit 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 example for this might be deciding to outsource all manufacturing to China. This corporate strategy might outrage your customers and lead them away from y our company. 4. The strongness 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 narrate 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 while giving the shareholder enough useful 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 cash 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 start from information overload and therefore the Annual Repor t 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 practices leaks to the public, the customers may switch to a competitor if they strongly disagree with said practice or strategy. fiscal 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 or so 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 firms prestige in the community.5. Management knows when creating the Annual Report that competitors are going to analy se 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 image of their company in the public.This report is intended to show the companies performance 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 violation on the environment. Nowadays, many compa nies use sustainability reports to improve internal 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.