10 Pages
2492 Words
Part A: Essay
1: Introduction - Stakeholder Roles in Using Annual Reports and Accounts
This essay will discuss important roles and functions associated with stakeholders with respect to usage of annual reports for Companies listed in the London Stock Exchange. The usage and application of annual reports is regarded as an important necessity for a stakeholder to ensure appropriate performance evaluation for a company. Annual reports are also deemed to portray vital information about organisational strategies implemented during a financial calendar and how it reflects on qualitative and quantitative performances. The preparatory basis of annual reports is also significant to allow a stakeholder to decide whether or not future investments are needed to be contemplated in a specific company.
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2: Main Body
2.1: Identification of relevant stakeholders
The relevant stakeholders identified for a particular company belonging to the London Stock Exchange which encourages usage of annual reports can be categorised as per internal and external divisions and is individually discussed as follows.
2.1.1: Internal stakeholders
Internal stakeholders are identified as the primary division of relevant stakeholders who make use of annual reports and accounts published by a company during every financial cycle. The composition of internal stakeholders predominantly includes members situated within an organisation comprising employees, labourers, subordinates, managers and board members. As per views and expressions of Sutton et al. (2022), internal stakeholders are cohesively related with facilitating daily operational requirements and activities for a company to achieve its designated goals and milestones. Internal stakeholders are also identified as important personnel who directly influence organisational continuity and perpetuity over a long period. The role of internal stakeholders of an organisation is also important to determine which facets of a company have under or over performed during a financial calendar. This is usually represented in annual reports and also acts as a marker for internal stakeholders to decide how future performance can be improved or maximised for a company to achieve competitive dominance.
2.1.2: External stakeholders
External stakeholders are identified as the second group or division of stakeholders who use annual reports published by a company during every financial year. External stakeholders are further categorised as per government bodies, investors, suppliers and customers. Functional roles of external stakeholders are mostly associated with indirect influence for a company’s daily operational necessities and requirements. Mohammad (2019), narrated and idealised that external stakeholders are perhaps more significant to contribute financial resources for maximising financial valuation attached with a particular organisation. Therefore, an annual report containing positive financial and qualitative indicators is likely to attract a higher external stakeholder association and influence.
2.2: Qualitative usage of annual reports
The identified and relevant stakeholders can primarily use annual reports for qualitative purposes that include the corporate governance report, ESG report and CSR report. The relevance of these reports with respect to identified internal and external stakeholders are individually discussed as follows.
2.2.1: Corporate Governance Report
The corporate governance report mainly outlines the overall organisational structure implemented to produce annual outcomes applicable for a specific company. Additional factors attributed with presentation of corporate governance report also include ethical principles and considerations towards integrity facilitated to contemplate continuation of daily activities (Baier et al. 2020). The usage of a corporate governance report is perhaps plausible for internal stakeholders to identify prospective direction a company is following to achieve its goals and objectives. The corporate governance report is also important for external stakeholders to determine business integrity and legislative requirements met to achieve these outcomes.
2.2.2: ESG report
The ESG report outlines qualitative attributes associated with environmental, social and governance factors applicable for a company located in the London Stock Exchange. The main principles and fundamentals associated with preparation of an ESG report mainly involve the contribution of a company towards harmonisation in favour of communities, societies and the environment. The ESG report is perhaps important for internal stakeholders to determine the dedication level of an organisation with respect to meeting trust of employees considering operational facilities contemplated. This report is also essential for stakeholders to ascertain how social causes and awareness is met and created by a company to achieve long-term sustainability.
2.2.3: CSR report
CSR report mainly outlines a company’s rigorous efforts to favourably induce customer attraction and create a simultaneous economic impact. The importance of CSR report for internal and external stakeholders is essential by a company to maximise long-term credibility and build a renowned brand image (Ameraldo and Ghazali, 2021).
2.3: Quantitative usage of annual reports
In addition to qualitative usage of annual reports, quantitative usage by stakeholders is also essential to determine financial suitability of a company achieved during a financial calendar. This is demonstrated as per numericals obtained from statements of comprehensive income. financial position and cash flow which are individually discussed as follows.
2.3.1: Statement of Comprehensive Income
The statement of comprehensive income is identified as the primary usage of annual report for quantitative purposes contemplated by both internal as well as external stakeholders. The statement of comprehensive income outlines operational efficiency and strengths achieved by a company in the London Stock Exchange with respect to command for daily operational requirements. As per views and expressions of Lee et al. (2020), the statement of comprehensive income predominantly locates manufacturing and operational efficiency which is demonstrated by reciprocating figures of gross profit, operating profit and net profit. The preparation and presentation of a comprehensive income statement is perhaps important for internal stakeholders to identify potential areas in which operational performance of a company has under or over performed during a financial year. Necessary upgradation and rectifications can be further planned through figures represented by income statements to improve future operational performances The income statement is also an essential proforma available for external stakeholders to determine profit composition of a company and make investment-oriented decisions accordingly.
2.3.2: Statement of Financial Position
Statement of financial position can be alternatively termed as the balance sheet of a company which establishes overall position of Assets and liabilities acquired during a financial calendar. The statement of financial position is perhaps more applicable for internal stakeholders to determine division of current and noncurrent assets and how it contributes towards profitability obtained in a financial year. The liabilities section of the statement of financial position is perhaps more plausible for external stakeholders to identify potential debts and borrowings of a company and how it can impact investment propositions. The statement of financial position is perhaps identified as the most important proforma of quantitative substance carried out through annual reports depicting financial credibility achieved by a company.
2.3.3: Statement of Cash Flows
The statement of cash flows is identified as the third category of financial statements to address quantitative use of annual reports. According to Ball and Nikolaev (2022), cash flow statement predominantly determines cash position through three important organisational activities of operating, investing and financing. The operating and financing activities are mostly plausible for internal and external stakeholders while investing activities are an influential financial marker applicable for both categories of stakeholders. The cash flow statement is identified as a credible quantitative marker which addresses liquidity generated by a company through continued operational and decision-making processes.
2.4: Proposing future framework for decision making and investments
The usage of annual reports and accounts by different stakeholders is perhaps more suitable for proposing future frameworks associated with decision-making and investments. The presented results as per a company’s annual reports predominantly indicate which financial areas are deemed strong facets and what proportion of investments can be contemplated in future by a stakeholder. Turzo et al. (2022), stated that the ideology associated with performance evaluation of a company through annual reports mainly indicate in which avenues future investments can be made and how much funding is needed to be infused to obtain a higher return. The proposal of a future framework through annual reports also includes the scope of reducing financial risks to acquire a feasible profitability and return.
2.5: Overview of potential organisational threats and risks
The preparation and presentation of annual reports and accounts for a company listed in the London Stock Exchange is also useful to outline the overview of potential threats and risk applicable. The determination of risks and threats are predominantly essential to locate competitors prevailing in the same industry and domain as compared to the selected company. Threats and risks can be categorised as per qualitative and quantitative risk where qualitative risks mainly include operational inefficiency, low customer base and disintegrity with suppliers. Quantitative risks mainly include lower profitability, low cash availability and overleveraging for inducing future funding (Hang et al. 2020).
2.6: Product and service lines and composition
Product and service lines along with composition is identified as a major usage and application of annual reports applicable for stakeholders associated with the company listed under the London Stock Exchange. The product and service lines mainly include standalone and by products facilitated by a company to meet revenue and profitability requirements. A higher stakeholder attraction is likely to be induced when a higher variety of product and service lines are facilitated by an organisation which maximises the scope to increase revenues in future.
3: Conclusion
This essay has mainly discovered qualitative and quantitative attributes associated with the necessity of annual reports applicable for stakeholders. The identified stakeholders are categorised as per internal and external divisions that include employees, managers, investors and government bodies. The qualitative aspects covered under the annual report mainly outline corporate governance and CSR attributes of a company that enable a stakeholder to determine environment and societal emphasis offered by a company. The quantitative attributes predominantly consider financial performance assessment through financial statements where income statement determines profitability composition while position of assets and liabilities is determined by the statement of financial position.
Part B: Poster 1: Introduction
Usage of annual reports by important stakeholders of a company is deemed to be a credible marker to determine overall performance attributes achieved during a financial period. The annual report is also considered as an important document describing overall organisational features as well as attributes of financial substance obtained for a company.
2: Important Stakeholders
Important stakeholders associated with a company include employees, managers, investors, suppliers and government bodies. Significance of employees and managers is deemed relevant to locate operational strengths and weaknesses achieved by an organisation during a financial calendar. The strengths and weaknesses associated with financial composition and profitability are more inclined towards investors, suppliers and government bodies as an optimum surplus would encourage financial prosperity in future for a company (Reis et al. 2021).
3: Quantitative Use
Quantitative use of annual reports can be interlinked with analysis of financial statements presented by a company during a particular financial period. This fundamentally involves preparation and presentation of income statements which addresses overall composition of gross profit, operating profit and net profit accumulated through manufacturing process and operations. Statement of financial position is also considered a highly influential parameter to determine quantitative use of annual reports for external stakeholders where the primary position of assets and liabilities is located. Interest of employees and managers is highly inclined towards asset performances and acts as a suitable determinant to strategise future operational courses of action (Lakhtionova et al. 2020). Interest of suppliers, investors and government bodies is highly inclined for liabilities and equity formation of a company to determine future financial prosperity available. Cash flow statement is also identified as an important part of quantitative use which outlines available liquidity and also influences stakeholder attractiveness.
4: Evaluation of Investments
Evaluation of Investments is predominantly facilitated by external stakeholders associated with a company listed under the London Stock Exchange. The basis or parameter of evaluating investments is predominantly based on the statement of financial position of a company where healthy liabilities and assets positioning should encourage higher funding influx (Danso et al. 2019).
5: Conclusion
The usage of income statements is predominantly suitable for employees and managers to ascertain operational efficiency and identify potential discrepancy areas where future improvement can be contemplated. Usage of statements of financial position and cash flow position is likely to influence attention of investors, suppliers and government bodies which further paves way for a company to induce additional investments and receive subsidies and grants.
References
- Ameraldo, F. and Ghazali, N.A.M., 2021. Factors Influencing the Extent and Quality of Corporate Social Responsibility Disclosure in Indonesian Shari’ah Compliant Companies. International Journal of Business and Society, 22(2), pp.960-984.
- Baier, P., Berninger, M. and Kiesel, F., 2020. Environmental, social and governance reporting in annual reports: A textual analysis. Financial Markets, Institutions & Instruments, 29(3), pp.93-118.
- Ball, R. and Nikolaev, V.V., 2022. On earnings and cash flows as predictors of future cash flows. Journal of Accounting and Economics, 73(1), p.101430.
- Danso, A., Lartey, T., Amankwah-Amoah, J., Adomako, S., Lu, Q. and Uddin, M., 2019. Market sentiment and firm investment decision-making. International Review of Financial Analysis, 66, p.101369.
- Hang, T.T.B., Nhung, D.T.H., Huy, D.T.N., Hung, N.M. and Pham, M.D., 2020. Where Beta is going–case of Viet Nam hotel, airlines and tourism company groups after the low inflation period. Entrepreneurship and Sustainability Issues, 7(3), p.2282.
- Lakhtionova, L., Muranova, N., Bugaiov, O., Ozeran, A. and Kalabukhova, S., 2020, May. Balance sheet (statement of financial position) transformation in the light of new digital technology: ukrainian Experience. In International Conference on Integrated Science (pp. 25-41). Cham: Springer International Publishing.
- Lee, J., Lee, S.J., Choi, S. and Kim, S., 2020. The usefulness of other comprehensive income for predicting future earnings. The Journal of Asian Finance, Economics and Business, 7(5), pp.31-40.
- Mohammad, N., 2019. Integrated reporting practice and disclosure in Bangladesh’ s banking sectors. Indonesian Journal of Sustainability Accounting and Management, 3(2), pp.147â-161.
Part B:
- Reis, I.F., Gonçalves, I., Lopes, M.A. and Antunes, C.H., 2021. Business models for energy communities: A review of key issues and trends. Renewable and Sustainable Energy Reviews, 144, p.111013.
- Sutton, L.B., le Roux, T. and Fourie, L.M., 2022. Who Should Be Identified as Internal Stakeholders? An Internal Communication Practitioner and Consultant Perspective in the South African Corporate Context. Communicatio, 48(4), pp.93-116.
- Turzo, T., Marzi, G., Favino, C. and Terzani, S., 2022. Non-financial reporting research and practice: Lessons from the last decade. Journal of Cleaner Production, 345, p.131154.
