Contents of an Annual Report
Discuss the following scenario: Staff members from the marketing department of your firm are doing a splendid job selling products to customers. Many of the customers are so pleased that they are also buying shares in the company’s stock, which means that they receive a copy of the firm’s annual report. Unfortunately, questions sometimes arise that the marketing staff members are woefully inadequate at answering. Technical questions about the firm’s financial condition and performance are referred to the chief financial officer, but the director of marketing has asked you to write a memo in which you explain the key elements in an annual report so that marketing representatives are better prepared to respond to questions of a more general nature.
For your initial post, write a clear, concise memo (no more than 250 words) that describes the contents of an annual report so marketing personnel can understand the basic requirements of an annual report. Reference this week’s readings and lecture to help organize and explain your thoughts. In addition, answer the following questions:
- Do you think all marketing staff members should be equipped to speak with the public about the firm’s financial matters?
- What are some of the benefits of improving employee financial literacy?
Respond to at least two of your classmates’ posts.
Sample Solution
To: The marketing department
From: Dennis Treet
Date: June 24, 2021
Subject: Contents of an Annual Report
The purpose of this memo is to help you respond to technical questions about the company’s financial condition and performance.
According to Epstein (2014), an annual report contains various elements, which include:
- Highlights: This section details what the firm has achieved in the previous year and what it plans to do going forward. It highlights departments and subsidiaries that are the best performing.
- Letter from the President or CEO: The letter highlights the significant successes of the past accounting period and the company’s future plans.
- Auditors’ Report: The primary purpose of this report is to ensure the statements were prepared in line with the generally accepted accounting principles.
- Management’s Discussion and Analysis: MD&A section details the management’s future strategies and the achievements and failures of the previous period.
- Management’s Discussion of Financial Responsibility: The management commits itself to be legally answerable to what is in the financial reports.
- Financial Statements: These are the key documents which include the income statement, and the balance sheet.
- Notes to the Financial Statements: The notes help the annual report user to really understand what numbers in the financial statements mean.
- Other Information: This section contains the miscellaneous details such as new branches and qualifications of the key executives.
It is prudent for marketing staff members to be equipped to speak with the public about the firm’s financial matters. Marketing personnel has an incredible amount of influence on the customers. Their decisions to invest in the company may be stimulated by the marketers more than the other staff members. However, it is worthwhile to enhance the financial literacy of every employee. This gives them better awareness and understanding of how money works and how to handle it effectively. It also improves the quality of their financial decisions (Ene & Panait, 2017).
References
Epstein, L. (2014). Financial decision making: An introduction to financial reports. Retrieved from https://content.uagc.edu/ (Links to an external site.)
Ene, C., & Panait, M. (2017). The financial education-Part of corporate social responsibility for employees and customers. Revista Romana de Economie, 44(1), 145-154.
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