R.E.C. Inc.’s staff of accountants finished preparing the financial statements for 2010 and will meet next week with the company’s CEO as well as the Director of Investor Relations and representatives from the marketing and art departments to design the current year’s annual report. Write a paragraph in which you present the main idea(s) you think the company should present to shareholders in the annual report. Why do you think those ideas should be included?
Respond to at least two of your classmates’ posts.
The first thing a company should include within an annual report presented to shareholders is an introductory letter from the ceo where they may discuss any accomplishments and future plans for the company to improve their financial status and other companies they are involved with. An income statement will be included which will demonstrate the total amount of sales, cost of goods, expenses, financing activities and net income. The annual report will also include investing activities where shareholders can see how much stocks and bonds the company sold along with the cash flow accumulated from the sale of assets. An auditor’s report will be incorporated within the report where an auditor will state his opinion in regards to the organization’s accounting practices. More importantly, the report will include will include the company’s short and long-term debt and how much cash they have remaining after all expenses. All of the factors mentioned are important to list on annual report because it shows investors and shareholders whether or not if the company is in good financial health and it will determine if they a good future financial forecast.
Information that is provided on the annual report should give stakeholders and investors a clear understanding of how a company is performing and its direction for the future. When presenting an annual report to shareholders a letter from the President or CEO, the management’s discussion and analysis, financial statements, and the notes to the financial statements should be included. The CEO’s letter provides stakeholders with an overview of the past year’s successes and challenges. It also discusses future plans for the company. The Management Discussion and Analysis provides an overview of a company’s previous years performance. It compares how the company performed over a three year period. This section also discusses any known marketing conditions or economic trends that may impact the company’s liquidity (Epstein, 2014). The financial statements provide the stakeholder with a snapshot of the financial health of a company within a certain reporting period. The financial statements can provide valuable information about a company’s financial status and structure. The notes to the financial statements provide important information such as pension and retirement benefits, financial commitments, and significant events. This section helps stakeholders really understand what the numbers on the financial statements mean and shows if they are hiding any problems.
Epstein, L. (2014). Financial decision making: An introduction to financial reports [Electronic version]. Retrieved from https://content.ashford.edu/ Links to an external site.