Question

Use the SEC website and/or the company website to locate the annual report for a company of YOUR CHOICE for the most recent year. Identify and review the Notes to the Financial Statements and the Accounting Policies sections. Each student should write a memorandum to management commenting on how the accounting information can be useful for management decision making. The heading of the memorandum should contain the date, to whom it is written, from whom, and the subject matter.

Answer 1

We shall discuss about Apple Inc today. Here is the link for annual report:

https://s2.q4cdn.com/470004039/files/doc_financials/2019/ar/_10-K-2019-(As-Filed).pdf

Look at page 34 for details of accounting polices and other pages for notes to accounts.

TO

Luca Maestri Senior Vice President, Chief Financial Officer

Hello,

I am writing this to discuss about how accounting information can be used by management for effective decision making. Accounting information of any business is very crucial for decision making as they throw light on how a business is working. A very small example shall be looking at profitability of company. It helps us understand whether the company is working towards wealth maximization concept. Not only profitability, it also helps us to understand underlying factors which contributed towards this profitability. In long term, we should always assess the potential of a business in reaching its objectives and goals. This also helps us to understand whether a company is standing with its defined vision and mission. Say a company states its vision as working for innovation but it is not investing in developing new methodology and ideas for research and development, this provides a red flag over long term even if the company is profitable now, the question is whether it could sustain its profitability. Management should analyse the the numbers to look beyond these figures and interpret them for the benefit of all stakeholders.

Thanks