Question

The following are the major the potential user groups of an annual report. Elaborate on their information needs.

1. 1. Company management.
2. 2. Competitors.
3. 3. Customers.
4. 4. Employees.
5. 5. Governments.
6. 6. Investment analysts.
   7. Investors.
   8. Lenders.
   9. Rating agencies.
   10. Suppliers.
   11. Unions.

Answer 1

1. Company's management : Company management need to take various decisions with respect to day to day affairs of the company. Moreover, they have to analyse multi-dimensional analysis of financial ratios for improved performance of the company.

2. Competitors: Competitors will be more interested in operating performance of the company, financial condition of the company.

3. Customers: Customers of the company see the financial viability of the company through various ratios and past performance of the company. It will be useful for maintaining long-term relationship with the company.

4. Employees: Annual report will be helpful to the employees in understanding the various business parameters of the company. It will be useful in increased productivity of the employees.

5. Governments: Government will be most interested in the amount of taxes ought to be paid by the company and that what is paid by the company. Also the government needs the annual report to append in various national reports that reflects the economy of the country taken together.

6. Investment Analysis: Investment analysts need financial statements of various companies to compare and recommend a better company's securities to their clients.

7. Investors: Investors or shareholders are the most important users of the annual report. These are the persons who will be willing to understand how the business is running, how the company is performing and whether their invested money is being properly utilised or not and providing them a good return.

8. Lenders: Lenders, financial institutions will require financial statements to analyze the crediability of the company that whether their loaned money can be repaid by the company within time. This can be analysed by looking at debt equity reatio, liquidity ratios of the company.

9. Rating Agencies: These agencies need financial statement in order to give rating to the company or its securities and can publish various public documents for the other users.

10. Suppliers: Suppliers need to satisfy themselves regarding sustainability and credibility of the company whether it is safe to extend supplies to the company.

11. Unions: Unions need Financial statements in order to arrive at their payroll/compensations, whether it has been properly passed on to the union members.