Certain investors have gained knowledge in accountancy and they use the figures provided in annual reports before coming up with an investment decision. Others use information that is related to organization’s financial conditions and does not contain figures but only facts to make investment decisions.
Annual reports and their structures have changed over time to facilitate both kinds of investors. Now annual reports contain information about profit and loss, cash flows and overview of the finances of organizations. The length of these reports has increased as the required number of details has grown. Annual reports contain statements provided by management (Bartlett 1997). All these kinds of information were not previously a part of annual reports. Investment decisions are not only based on analysis provided by management and directors of an organization; the profit and loss information provided through annual reports is superior while making investment decisions. These statements are highly important for those who are literate in accountancy. Individuals having literacy in accountancy are investment analysts who provide information to investors on how well a company has performed and how well it will perform in future, and through this analysis, investors make their investment decisions. ...
is characteristic of annual reports increased the uncertainty amongst investment decision makers because they had no idea how organizations would perform in future and what initiatives the organization would take to make the company operate successfully in future years. Due to lack of information about future activities, investment decision makers used to be dependant on old data and their confidence in their investment decision used to lack confidence in success. This led to the introduction of management’s statements within annual reports. In these statements management provides insights into what future steps the management is going to take to make the company successful in future. This information helped investors and investment decision makers make investments on the basis of future operations, and these investment decisions lacked uncertainty. For example, during 1996, a study conducted by Abrahamson and Amir (1996) proved that annual reports containing the president’s letter are a useful insight for the investor trying to predict future performance of the organization. Similarly, a study conducted by Bryan (1997) states that the management of a company is required to disclose information about future operations through annual accounting reports of their organization, and these disclosures help investors in assessing whether the firm will make profit in future and align investment decisions accordingly. Information that profit and loss statements provide is quite limited, for example: Rogers and Grant (1997) argue that financial statements are limited to providing information regarding only one quarter of a company’s operational period. On the contrary, information provided by management gives insight into a longer period of time including past performance
Usefulness of Annual Reports
Information provided by annual reports is used by investors in making decisions regarding investment. This information is used by both accounting professionals and those who are not proficient in the field. …
To achieve this enlightened objective managers of the firms are required to make more considered decisions. Among many avenues of challenging decision making capital investment decisions also require extensive evaluation. Capital budgeting techniques are employed to make assessed investment decisions with quantitative results providing justification for the selection of certain opportunity among available options.
This paper illustrates that the lifecycle of an investment can be considered as comprising of certain phases. The key stages involved in the capital investment decision-making entail identifying investment opportunities, screening investment proposals, analysis and evaluating investment proposals, approving investment proposals, and implementing monitoring and reviewing investments.
An annual report is an article prepared yearly by companies premeditated to depict fair and spot on view of the company’s annual recital. It also gives an audited statement of finances primed in accordance to the company’s regulatory requirements and edict.
Bosch began as a Workshop for Precision Mechanics and Electrical Engineering. It was founded in 1886 by Robert Bosch (1861-1942). Its major shareholder is the not-for profit organisation "Robert Bosch Stiftung GmbH". (Company's Annual Report, 2005).
Bosch offers the following spare parts products: Batteries, wiper blades, starters and airfilters.
The Historical cost convention has different uses and dimensions for stewardship and for decision making purposes.
The historical cost convention means that an asset must be shown in the books of accounts at its cost of acquisition, or its "purchase price".
n in-depth analysis was conducted to determine Debt/Equity ratio and the available source of financing options for developing an optimum capital structure.
After analyzing the Debt/Equity ratio for the last four years, it was found the company rely lot on the equity. At present
Furthermore, the company endeavors to give products services that are environmental friendly. Moreover, the corporation is essential in developing technology required to enhance advancement and progress in many areas. Therefore, these
Investors are one of the stakeholders that utilize the financial information obtained through annual reports to make investment decisions. Certain investors have obtained literacy in accountancy and they use the figures provided in annual reports before coming up with an
Other real investment analysts use asset performance in the determination of real estate investment performance and in decision making (Greer & Kolbe, 2003, p, 8). According to Feng, (2010, p, 11), Internal Rate of Return and property based portfolios have also
The organization has also realized that most health insurers are requesting that physicians first refer patients to therapists with an aim of reducing medical costs. The target department, within the organization,
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