3 Pages
841 Words
Introduction - Key Stakeholder Roles in Financial Reporting and Analysis
The presentation will also cover current concerns affecting the accounting profession and the critical role that accounting for business operations and leadership plays in a firm. Among these parties are government organizations, potential investors, analysts, creditors, shareholders, and the general public. A detailed explanation of how stockholders might use the publicly available annual report and accounting of a company that is listed on the London Stock Exchange (LSE) concerning the specified learning goals. They use the annual report on operations and finances in the manner described below to make their selections:
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Main body
Stakeholders and use of published annual reports and accounts
A company that is publicly traded, such as one on the LSE, has a wide range of stakeholders, each with specific objectives and interests. These stakeholders include individuals, groups, and businesses. Stakeholders include the general public, governmental bodies, financial experts, creditors, stockholders, and possible investors (Jaiyeoba et al. 2018). Below is a detailed examination of how various stakeholders utilize yearly financial information and reports:
General Public
Marketing also helps customers and employees make decisions regarding their contacts with the business in general that can be justified. This transparency promotes openness and confidence between the company and the clients it serves (Bananuka et al. 2019). Transparency and Accountability: Public access to annual reports enables customers, employees, and the general public to get further knowledge about the operational and financial standing of an organization.
Regulatory Authorities
Governance and Compliance Oversight: Investigators monitor an organization's compliance with these standards to make sure that the board of directors is adhering to appropriate corporate governance practices. As cited by Stolowy and Paugam (2018), this oversight supports the capital marketplaces' ongoing transparency and accountability. Compliance Surveillance: Regulatory bodies, such as the Financial Conduct Authority (FCA) in the UK, utilize annual reports to build a company that complies with reporting requirements and public disclosure regulations. They attest to the organization's compliance with relevant financial reporting requirements, including the International Financial Reporting Standards (IFRS), as well as the necessary criteria for sincerity and openness.
Financial Analysts
Comprehensive Economic Analysis: Research firms and financial experts use annual reports to carry out thorough financial examinations of the company. According to Roszkowska (2021), the suggestions they provide to clients or the general public are predicated on the economic models and forecasts they created utilizing the information from the investigation. These kinds of evaluations help investors make decisions. Annual reports are used by analysts to refine their forecasts of the company's profitability and stock price. This information is necessary to estimate potential fluctuations in share price and to make investment recommendations.
Creditors
Examination of trustworthiness: Banks, buyers, and other stakeholders assess a company's confidence based on its annual reports. Furthermore, they carefully study the liquidity and leverage ratios to assess the company's ability to make payments and pay down debt. This information is crucial when deciding whether or not to provide the company with money or alter the terms of an existing loan. Covenant Compliance: Lenders can verify if the company complies with any budgetary restrictions or specifications included in loan agreements. They closely monitor the financial data in annual reports since any deviations from these requirements might result in additional enforcement from creditors.
Potential Investors
Return on Investment and Risk Assessment: Both people and organizations considering investing in the company review the annual reports to make well-informed investment decisions. They look at financial statements and significant financial parameters to assess the organization's financial health and the growth of potential clients (Queiri et al. 2021). They evaluate the company's historical financial performance to calculate the risk and return of investing in it. Industry and Market Analysis: Annual statements of operations usually include statistics about the organization's working environment, including the shifting dynamics of its market and industries. Potential investors utilize this information to understand industry trends, the competitive landscape, and the company's position within the industry.
Shareholders
Understanding Monetary Performance: One of the most important stakeholder groups is shareholders, who are the organization's owners. They review the yearly reports to evaluate the organization's achievements and financial health. As opined by Sierra-Garcia et al. (2018), the earnings statement, balance sheet, and cash flow summary are among the key accounting documents that are closely scrutinized to assess the business's financial condition, profitability, and solvency. Shareholders use the collected data to evaluate the returns on their investments. Assessment of Corporate Governance: Annual reports often contain information on corporate supervision practices, as well as the governance structure of the firm, the board of executives how they perform, and how stakeholders assess the implementation of rules and regulations.
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