Annual Report Evaluation
The nature of our connections to the world changes as we (humans) enter the modern world. Our identity as a social creature is emphasized even more considering that collective living is the only way we could survive these days. No human beings could survive very long without the help of others. This phenomenon can also be discovered in the world of business and financial. Today, businesses that want to grow further into the international world are forced to open themselves to the public, in order to receive outside financial assistance and thus, also outside interferences.
In these collective settings, the public that provide financial assistance toward a business need some kind of way to assure themselves that their money is used in the agreed manner. This is where annual reports become necessities. Annual reports describe the performance of a company as a responsibility toward its stakeholders. A wholesome performance of a company can be determined through various aspects of its operations. An annual report, especially the financial report portion, provides the data that we need in order to understand those performance levels.
However, due to the need to be concise and compact, financial reports are usually difficult to interpret for common people.
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In the Balanced Score Card concept for example, a company can be analyzed on how it learns and grow and how it relates to its surrounding environment, in addition to its financial performance. That is why financial reports are usually only a portion of the entire annual report. The other parts are full with responsibility reports for other dimensions of the business. These dimensions are equally important to condition a company that is healthy and operating effectively. In this paper however, I will only focus on the financial performance described within the annual reports.