Information and Communication

Information and Communication

Introduction

All public companies make a yearly review to connect with present traders, potential traders and employees. Annual reviews contain information about the organization's past efficiency, its present function and its upcoming objectives. Investors use the yearly review to learn about the organization's present financial health and to decide whether to purchase additional stocks of the company stock or offer their present share.

Discussion

What are the purposes of writing an Annual Report?

The main purpose of writing an annual report is to communicate all the information about the company in a clear manner to all the stakeholders. This communication of information could serve the following purposes:

Reassurance to the Investors

When the economic climate, the industry or the organization experiences economical problems, traders grow doubtful of keeping their investment. Investors wonder whether they should hold onto their shares or sell out before economical circumstances decrease more. One objective of the yearly review is to provide support to the traders that the organization's economical drawback is short-lived and that the organization circumstances will improve. The organization desires to recover buyer assurance and encourages traders to maintain their shares possession.

Communication of Market Information

Yearly reviews also connect market details to prospective and present traders. Potential traders may wonder what items the organization provides and who it provides them to. Current traders, meanwhile, may wonder what the organization plans to do going forward. Companies upgrade their promotion details regularly in order to remain aggressive. They include these details in the annual review to notify traders. This promotion details contains looking at present and prospective marketplaces, present items and famous brands, and future product releases.

Reporting of Financial Results

Many yearly review users want to see the organization's economical outcomes for the past year. The company contains the four main statements in the yearly review to review the economical outcomes. These statements include the income declaration, the balance sheet, the declaration of stockholder's value and the declaration of cash movements. Traders use these statements to determine the organization's earnings and cash movement for the period. The buyer also tries to predict the organization's future performance based on its traditional economical outcomes.

Providing Assurance

The yearly review also assists the purpose of guaranteeing traders that the economical information is revealed fairly and perfectly. Every public organization goes through an economical exam from an outside public accounting firm. The auditors review the statements, reproduce the economical dealings registered throughout the period and confirm that the numbers were revealed perfectly. The organization includes the auditor's review in the yearly review.

What kind of Information investors seek from an annual report?

Net Worth Charts

Traders and lenders who have money spent in the organization will want to know the organization's yearly economical position. One feature of a yearly review is introducing the net value of the organization (Zekany & Elsass, 2004). This is done by totaling the organization's obligations and resources and subtracting the obligations from the resources. The concluding figure is called the net value which shows the true economical position of the ...