To what extent are a company's annual report and accounts useful in Essay

To what extent argon a accompanys annual report and accounts recyclable in understanding and analysing its market, productive and fin - Essay ExampleThis paper discusses the usefulness of annual reports in understanding a companys market, drudgery and financial performances. Management perspective A company adopts to strive to remain in competition within the framework of several internal and foreign factors like political, economical and social structures. The owners delegate most of their responsibilities to the senior management thus elevating the power of the management to determine a companys objectives and to formulate policies for the purpose of realisation of those objectives. It is only with the guidance obtained by studying annual reports and accounts, the management can make operational and strategic reconfigurations of resources for the purpose of consolidating the position of the company in the competitive market. The independent controlling power of the manageme nt separate from the owner ensures that the sole objective of profit optimization cannot be realised since the companys policies and behaviours are also controlled by various other factors. Technically, profit can be maximized if the organisation can detect marginal cost, marginal revenues and merchandise output up to a point where marginal cost of the last unit produced just equates to the marginal revenue received from its sale. (Haslam, et al, 2000, p.4) In fact, a answer of rules and regulations of accounting helps the management to identify the production cost and sale price of each unit to determine the companys performance in the field of production and sales. The annual reports reflect the performance patterns of a company from one period to the other (Haslam, et al, 2000, pp.4-5). Users of accounts Annual reports and accounts can be defined as representation of communication of information about the financial position and performance of an entity to interested parties. ( Laidler & Donaghy, 1998, p.1) In any company, every year balance sheet and profit and redness account are published in a document form along with other financial statements, together known as annual reports and accounts. These accounts are useful for both internal personnel like directors and managers, and also external people like investors, creditors, customers etc. Investors are those people who invest their money by purchasing shares of a company thereby taking risks in the hope of getting dividends in due time. For this purpose they need to know the management competency of the company in order to determine whether their investments will be profitable. Employees and trade unions study the annual reports to become aware of the financial stability of their company to decide whether they will be continued to be employed at appropriate levels of remuneration. The annual reports are also important for the lenders like banks and individuals who lend money to a company. They need to be aware whether the company will be able to repay their money together with their interest in due time. Similarly, for creditors and suppliers, the annual reports picture them the information whether they will be getting their payment at the right time. Then there are customers like other organisations who purchase goods from the company they need to know the financial stability of the company to remain satisfied that goods and services will be