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New Era University

College of Accountancy
No. 9 Central Avenue, New Era, Quezon City

INFORMATION MANAGEMENT & CONTROL


4-BSACT

GROUP 3

LEADER:
CAÑERO, KURT VON RAVEN M.

MEMBERS:
DAYAON, ELISEO JR. B
GALIZA, FRANCES ELAINE B.
GARCIA, MA. GIZELA B.
MACALINO, TRISTAN JAMES D.
PLACIDO, RIZZA MAE T.
RAMOS, SHAIRA J.

1. The goal of preparing an annual report is to communicate information from a company


to its targeted users. (a.) Identify and discuss the basic factors of communication that
must be considered in the presentation of this information. (b.) Discuss the
communication problems a company faces in preparing the annual report that result
from the diversity of the users being addressed.

A. There are three main financial Statements that are found in the Annual report a company sends
out at the end of each year reporting its financial activities for the year -Income Statement, Cash
Flow Statement and Balance Sheet. Although these are three very large parts of the Annual report
it is only a small percentage of it. These financial reports show how the company has done business
in a financial way. What the Annual report also shows it why it performed that way wither it was
because they were changing its product line or if they had another large difference from other
years. They can also show where they are going in the future along with new investment ideas. It
also gives a brief history of the company along with where it stands now in terms of how many
stores, where they are located, how many people are employed part time or full time.

An annual report is one means of communication for a business. The report should be clear and
concise because it is a one-sided communication. It should be worded carefully in order to portray
the message that the business wants to come across to its readers. The material presented should
be easy to read, provide appropriate disclosure of relevant facts and information, and be accurate
and clear.

B. A problem that might accrue with sending out a Annual report is the fact that a corporations
competition will be able to see how they have done for the year, if there were any new changes in
products along with where they see themselves going in the future. Although you want to make
the shareholders along with potential shareholder feel that the corporation is in a good place to
keep their investment or invest into you need to be careful just how much information you give
out for everyone to read.

2. Select two types of information found in an annual report, other than the financial
statements and accompanying footnotes, and describe how they are useful to the users of
annual report

 Other than the financial statements and accompanying footnotes, the other useful
information from an annual report is the management’s discussion and analysis by taking
a look at the company’s previous years, we can see how the sales, profit margins, operating
income, and net income change as the years go by. The management’s discussion and
analysis can facilitate in the company’s decision making by looking at the factors that affect
the business in a positive or negative way.
 Another useful information found in an annual report is the company description. This
includes the description of their business segments that includes products or their services.
An innovative company description can attract investors, that being said, it is important for
the business to have an appealing company description that provides readers with basic
knowledge of what the company does

3. Discuss at least two advantages and two disadvantages of stating well-defined corporate
strategies in the annual report.

 It presents the Corporation’s image by maintaining its reputation in order to attract more
Investors and Partners
The annual report is a vital tool for marketing the corporation’s image to the public. By presenting
a well-defined annual report to the public, the corporation can easily get into the minds of the
public to get their favor and interests. Giving the data to people will put the company in a good
market position as well as build its reputation, thus gaining themselves an edge to its competitors.
For potential investors, they tend to look for a company who has a mission and objectives to be
done in a company. Because for them, it is really important for a company to have necessary goals
to accomplish thus, convincing them to partake to its organization due to the fact that they are
assured that the company has a future to aim. By stating its mission and objectives in the annual
report, it places the company in the right track to attain success.

 Helps with the financial and operational decision making tasked to improve the company’s
performance
Annual reports are very helpful to stakeholders. But more importantly, to financial and securities
analysts. Because it lets them analyze the organization in a broad manner anchored with certain
information provided by the annual report of the company. Thus, they can produce accurate and
efficient decisions that enhances the company’s performance. For example, the performance of
the company are gradually shown in the report stating its reasons and causes on its growth of
profits as well as its decline on other operations. Financial and Securities Analysts can analyze the
situation and do necessary actions to improve its diversification and highlight its strengths.

 Exposes the company to competitors that will leverage it for their own benefit
Due to the fact that reporting an annual reports to the public for improvement of brand recognition,
there is also a disadvantage to it. It exposes the company’s plans and future objectives to other
competitors in the same aspect, letting them know how to produce a competitive strategy that
counters your plan and objective. They can use this as a leverage and turn it into an advantage for
them that can put them ahead of you. This will be a huge impact for the company because with the
present disadvantage, it may hinder the company to achieve its certain goals and objectives.

 Bound to exercise the goals and achievements of the company without giving room to
flexibility
Stating your goals and objectives in the annual report, makes the public hope for it to be
accomplished. Because of this, the management is locked to achieve its goals and objectives thus,
limiting themselves to explore and leverage other opportunities outside its goals and objectives
that can be beneficial for the company. Focusing on the achievement of its goals and objectives,
the management may not be flexible in certain adjustments and revisions, putting themselves far
from achieving its tasks for the year and letting opportunities passed.

4. Evaluate the effectiveness of annual reports in fulfilling the information needs of the
following current and potential users: (a) shareholders, (b) creditors, (c) employees, (d)
customers, and (e) financial analysts.
a) Shareholders. Annual reports are effective for shareholders in that they give yearly overviews
of past and upcoming years, and provide strategies for the future (Annual Reports, 2017). It also
provides some assurance of the solvency of the business.

b) Creditors. Annual reports are effective for creditors because they provide information about a
company’s performance and where it stands financially.
c) Employees. Annual reports are effective for employees because they allow management to
effectively evaluate employees on such key performance indicators as teamwork, innovation, and
commitment to the job (Annual Reports, 2017). These reports also provide employees with a
greater understanding of the company as a whole.

d) Customers. Annual reports can show customers a company’s strength financially. Having
suppliers that are strong financially provide reassurance for customers that invest their money and
time.
e) Financial Analysts. Annual reports are effective and important to financial analysts because
they work as reference documents in comparing past and present numbers, and in comparing one
company’s results to another’s.

5. Annual reports are public and accessible to anyone, including competitors. Discuss how
this affects decisions about what information should be provided in annual reports.

Despite annual reports being accessible to the public, which includes competitors, it is important
that annual reports be uniform in providing information required by the Securities and Exchange
Commission. While it may seem beneficial to a company to leave out certain items or elements
from the annual report, it is healthier for the company to provide all information, whether negative
or positive, to keep from risking exposure for dishonest reporting, and eventually losing
shareholders. The three elements that should always be included in the annual report are the
balance sheet, the cash flow statement, and the auditor’s report (What to Include in Your
Company’s Annual Report, 2017).

6. Find the annual report for a company that includes sustainability reporting. (A)What
information does the company disclose? (B)Do you think such information is helpful to
investors?
A. It included information such as the sustainability of the main ingredients they use on their
products, their efforts towards climate protection through reducing carbon footprints, the
company’s donations, the company’s attention towards the human rights of their employees,
the company’s bottling efficiency and resourcefulness, and the efficiency of their use of water
and its improvement throughout the years.
B. Such information are helpful to investors because with the data that is gathered here, the users
may assess by themselves or through help of a professional about how lively the company is,
whether or not the company is close to dying off, whether or not the company is thriving in
what it does, all these factors help in figuring out the whether the company is being well off
and whether the company will keep being well off in the long run. The life of a business is an
important factor for investors, because the longer a successful investment lives, the more
profits it will generate.

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