Usefulness of the annual report for investment decision making purposes

Usefulness of the annual report for investment decision making purposes Essay example
Masters
Essay
Finance & Accounting
Pages 4 (1004 words)
Download 0
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. …

Introduction

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. ...
Download paper
Not exactly what you need?

Related papers

People aspects of capital investment decision making
Though these techniques have successfully gained popularity as deciding tool, however, influence from the human element on decision making still maintains its dominance (paper). Managers of the firm themselves receive impact from their traits leading to influenced preferences in making decision. Among many reasons that advocate the acceptance of human element weight in investment decision, it is…
TESCO Annual Report 2011
It has particularly realized that for this relationship to materialize it has to continue to be grounded by ethical business practices. In doing so it has established a code of ethics for its staff, which basically set the standards for business behavior within it. In realization of the impossibility of covering every aspect of its activities, TESCO has instead set out principles of business…
Loblaws Annual Report Analysis
Such misstatements can arise from either an error or fraud. according to the auditor’s opinion, the consolidated financial statements presented fairly, in all material respects, the consolidated financial position of Loblaw Companies Limited as at January 1, 2011 and were in accordance with the Canadian generally accepted accounting principles. 3. Loblaw is Canada’s largest grocery retailer…
idenyify and explain the keys stages in the capital investment decision-making process, and the role of investment appraisal in
Initial investigation of the proposal pursues highlighting the projects’ feasibility (both technically and commercially). The origination of the proposal can come either from laid mechanisms that the entity has established to scan the environment for investment opportunities; technological developments/changes; or from those working in technical positions (Rohrich 2007, p.3). Investment…
Investment Report
Tesco is currently the world’s third largest retailer in the world measured by revenue and the second largest when measured by profits. The company is undoubtedly the largest in the retail industry in the UK, where it controls approximately 30% of the market. This places Tesco substantially ahead of ASDA its closest rival which is operated by Wal-Mart a U.S owned operation. However, BBC (2012)…
Decision Usefulness approach vs. Measurement Approach
The Single-Pearson Theory The Single-Pearson decision theory aims to understand how an investor makes rational decisions under circumstances of certainty. The theory appreciates the concept of information and enables decision makers to keep informed and modernize their beliefs. The concept uses the publicly available financial statements as source of information. Consider the following…
Annual Report Analyze: Star Bucks
But the overall performance of the firm in year 2005 was much more unreliable, because the firm is not doing its job satisfactorily. If we look at all three ratios for the year 2005,.becauze current ratio and acid test ratio are are going down and in the year 2005 the current ratio is very unreliable as total current liabilities exceeds the total current assets. Working capital ratio explains the…