Annual Report Information Conveyance

This assignment explores the effectiveness of annual reports in communicating vital information to external market users. It highlights the issue of non-disclosure as a major challenge, hindering the comprehensive representation of financial and non-monetary data. The analysis suggests improvements to the reporting framework through regulatory measures and enhanced presentation techniques to enhance the value and clarity of annual reports.

Disclosure and the Usefulness of Financial
Reports

Table of Contents
INTRODUCTION ..........................................................................................................................3
1. Assessing the percentage increase in gross profit .............................................................3
2. Finding the level to which % increase in net profit ...........................................................3
3. Evaluating the return on investment pertaining to the year of 2015 & 2016 ....................4
4. Commenting on the strengths of profit and loss a/c ..........................................................4
5. Presenting financial position for the period of 2016 ........................................................5
6. Assessing the effectiveness of cash flow statement ..........................................................5
7. Recommending investors whether they need to hold, sell or buy securities......................6
CONCLUSION ..............................................................................................................................6
REFERENCES................................................................................................................................7
PART 2............................................................................................................................................8
Comment on the applicability of this statement” Annual reports are an outdated mode of
informing users regarding the activities of a company.”........................................................8
Introduction............................................................................................................................8
Literature review....................................................................................................................8
Summary.................................................................................................................................9
CONCLUSION....................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Financial reports are highly significant which provides deeper insight about the monetary
health and performance. It contains information regarding the extent to which business unit has
performed activities in an effectual way. Besides this, financial reports furnish information
regarding how efficiently company made use of resources and thereby generated desired margin.
In the recent times, it is highly required for the companies to disclose financial information at the
end of accounting year. This project report is based on Bellamy’s organic which is the leading
food & beverage retailer of Australia. Thus, report will highlight the extent to which gross and
net profitability aspect of the firm increased over time frame. In addition to this, it will also
provide deeper insight about the profitability and liquidity aspect of firm. It also depicts the
importance of financial disclosure and accounting reports.
1. Assessing the percentage increase in gross profit
Computation of % increase in GP
Particulars 2015 2016
%
increase
or
decrease
Gross profit 41 112 173%
The aValle de Souza, S., Dollery, B.E. and Kortt, M.A., 2017bove depicted table shows
that in 2015 GP was AUD $41 million, whereas it reached on AUD $112 million at the end of
2016. By considering such aspect it can be stated that GP level increased by 173% at the end of
2016. Hence, it is the positive indicator which shows that Bellamy’s organic Ltd generated high
gross profit during 2016. This aspect shows that business unit has exerted effectual control on
direct expenses in the period of 2016 which in turn aid in the profitability aspect of firm.
2. Finding the level to which % increase in net profit
Calculation of % increase in NP
Particulars 2015 2016 %

increase
or
decrease
Net profit 9 38 322%
Tabular presentation entails that net profit of Bellamy’s organic increased significantly in
2016 by 322%. In the accounting year 2015 and 2016, net profitability of Bellamy’s organic was
AUD $9 and 38 million respectively. On the basis of such aspect, it can be stated that business
unit has controlled the level of indirect expenses more efficiently.
3. Evaluating the return on investment pertaining to the year of 2015 & 2016
Ratios related to return on investment is as follows:
Particulars 2015 2016
Return onValle de Souza, S.,
Dollery, B.E. and Kortt, M.A.,
2017 invested capital
26.37% 57.23%
Return on equity 28.13% 58.01%
From analysis, it has been found that return generated by 57.23% through capital
investment. In addition to this, return on equity accounts for 28.13% & 58.01% significantly in
the year of 2015 and 2016. Thus, it can be presented that business unit has made optimum use of
shareholder’s equity and capital while carry out business activities as well as functions.
4. Commenting on the strengths of profit and loss a/c
Profitability analysis of Bellamy’s organic for the period of 2015 & 2016 is as follows:
Particulars Formula 2015 2016
Gross profit ratio Gross profit / net sales
* 100
32.9% 45.7%
Operating profit ratio Operating profit / net
sales * 100
9.1% 22%
Net profit ratio Net profit / net sales
* 100
7.24% 15.67%
By doing analysis of profitability statement it has been identified that profitability aspect
was good in the year of 2016 as compared to 2015 (Noto and et.al., 2016). In the year of 2016,
gross, operating and net profitability aspect of Bellamy’s organic increased to a great extent over

the prior years. Moreover, in 2016 GP margin of Bellamy’s organic inclined from 32.9% to
45.7%. Besides this, in 2016, operating and net margin accounts for 22% & 15.67% which was
greater than the past years. This aspect reflects that business unit has exerted effectual control on
both direct and indirect expense level. The above mentioned ratio analysis presents that
company’s profitability increased significantly. Thus, for attaining success business unit should
make focus on making competent strategic and policy framework that aid in the profit margin.
5. Presenting financial position for the period of 2016
Liquidity ratio analysis
Particulars Formula 2015 2016
Current ratio Current assets /
current liabilities
3.06 2.32
Quick ratio (Current assets –
inventory) / current
liabilities
2.30 1.11
From the analysis of statement of financial position, it has been assessed that current ratio
of firm decreased from 3.06 to 2.32 at the end of 2016. It shows that Bellamy’s organic has
enough assets for meeting the current obligations. Moreover, according to the standards business
unit must have 2 assets for meeting 1 current liability such as creditors, bank overdraft etc.
Hence, it can be stated that liquidity position and performance of Bellamy’s organic is in line
with the Industry standards (Alice and Gopal, 2016). Further, quick ratio performance of
Bellamy’s organic also declined in the year of 2016. At the end of financial year 2016, quick
ratio of firm was 1.11 times which is greater than ideal standard such as 0.5:1. By considering
this, it can be stated that business unit has maintained high quick assets with the motive to meet
liabilities on time. Thus, by considering the current position it is recommended to Bellamy’s
organic to make focus on investing money in profitable investment opportunities rather than
keeping money with itself. From overall evaluation, it can be presented that liquidity position
and performance of Bellamy’s organic is sound.
6. Assessing the effectiveness of cash flow statement
Cash flow analysis of Bellamy’s organic through ratios is as follows:

Particulars 2015 2016
Operating cash flow growth %
YOY
513.20 87.66
Free cash flow growth %
YOY
988.25 49.14
Graphical presentation shows that growth which takes place in the operating and free
cash flow decreased to a great extent in 2016 as compared to 2015 (Truby and Kratsas, 2017).
Thus, Bellamy’s organic is required to frame competent strategies and policies that help in
maintaining cash flow in a positive manner.
7. Recommending investors whether they need to hold, sell or buy securities
It can be suggested to the investor to invest in the shares of the company as the existing
financial performance of the form is god as its overall performance is increasing from one period
to another. Liquidity of he above firm is higher that reflects its ability in order to generate higher
sales by collecting revenue from all its debtors in less period. On the basis of liquidity, investors
are recommended to sell their shares to generate higher returns. The profitability factor of an
entity is good as it is continuously increasing from one period to another shows the higher silks
and the capabilities of an individual to hold all the shares with them till its generates higher
return. Due to external market traffic an entity will lower its existing share price in order to
attract wide number of investors to invest in the business concern. The low share prices is the
right time for all the investors to buy the share price of the current company in order to get
higher amount of benefits.
CONCLUSION
From the above report, it has been concluded that profitability and liquidity position of
Bellamy’s organic was sound. It can be seen in the report that in 2016 business unit has made
optimum use of financial resources as compared to 2015.

REFERENCES
Alice, B. and Gopal, N., 2016. Isotopic abundance ratio analysis of 1, 2, 3-trimethoxybenzene
(TMB) after biofield energy treatment (The Trivedi Effect®) using gas chromatography-mass
spectrometry. American Journal of Applied Chemistry. 4(4). pp.132-140.
Noto, T., and et.al., 2016. Development of a sequential data correction method for isotope ratio
analysis by resonance ionization mass spectrometry. Journal of Nuclear Science and
Technology. 53(2). pp.289-294.
Mascaro, L., and et.al., 2016. Long term signal to noise ratio analysis of magnetic resonance
images from multicoil array. Physica Medica: European Journal of Medical Physics. 32.
p.130.
Dobrzykowski, D. D., McFadden, K. L. and Vonderembse, M. A., 2016. Examining pathways to
safety and financial performance in hospitals: A study of lean in professional service
operations. Journal Of Operations Management. 42. pp.39-51.

PART 2
Comment on the applicability of this statement” Annual reports are an outdated mode of
informing users regarding the activities of a company.”
Introduction
Current report is all about analysing all the articles of different authors in order to get the
final data on the common aim of the research report that is based on the importance of annual
reports in an entity. The question arises in the current research study to collect data regarding the
annual report which are outdated in conveying important information about various business
activities of the business entity or not are explained with the different views and opinions of all
individuals mentioned in their articles.
Literature review
According to the study of Wang Xia and Wu Min. (2011) information presented with the
help of annual reports depicts the poor quality of information that deflate an entity's overall aims
and the objectives. The information of past financial report are carried forward from one year to
another that also carry forward all errors lies in the past reports. Quality of financial reporting is
essential as the increase or decreases in the stock market performance is based on the changes
incurred in the financial reporting of an entity. The reason behind the presentation of the overall
report is poor due to the non-inclusion of all the accounting principles or regulations in order to
consider each and every factors in the existing financial reports. Penalties imposed on an entity
with the changes incurred in the external capital markets charges different rates as per different
countries but its presentation in the financial statement's gets changes as the owner of the firm
manipulates the reports in order to improve its existing performance.
From the point of view of Ghazali, N.A.M. (2010) investors of the firm have to look for
other sources of analysing corporate information about an entity due to non-disclosures in the
annual reports. Financial statement's of the business will be enclosed in the annual resorts will
depict the transparent conditions of an entity in front of the external environment but non-
disclosing things will create confusion regarding various treatments in the financial statement's.

Information mentioned in the annual reports will be considered by the investors but due to wrong
facts and figures about an entity investors will be withdrawn their interest from the existing firm.
Company is required to disclose all this information which is essential for an entity in order to
disclose as per the legal imposition. The reporting requirements will be fulfilled by an entity by
focuses on the Malaysian accounting standards board according to which all important
information will be disclosed by an entity. Nowadays each and every entity is required to follow
the mentioned guidelines in order to improve the existing structure of annual reports of the
business.
As per the study of Alzarouni, Aljifri, Ng and Tahir, (2011) suggest that financial
reporting environment of UAE and it compliance in the annual reports prepared by the
companies in order to present all the confidential information. The author emphasises on the
adequacy of all the disclosures made by an entity in the annual reports in relation to the
efficiency of the information in improving the existing performance of the firm. Disclosures are
essential as it focuses on each and every factors to be considered by an entity in the reports to
reflect its overall financial performance. True presentation of facts and figures will facilitate all
the investors in order to take important decisions in the favour of an entity. An entity will also
focus on the special committee such as AICPA that investigates all important matters of the firm
in improving overall compliance factors in the existing business. Role of this particular entity is
to focus on the desired aims and targets to be accomplish in a given span of time.
Summary
It can be summarised from the above findings that there are various issues faced by an
individual while conveying important information wit the help of annual reports prepared by an
entity. Non-disclosures is the biggest issue that creates challenges for the firm in representing all
the business information in front of the external market users (Valle de Souza, Dollery and Kortt,
2017). It can be evident from the above discussion that annual reports are not outdated ways but
its structure can be improved by following various regulatory measures in improving the better
presentation of all the financial as well as non-monetary information in the annual reports
prepared by the business in a particular time period.

CONCLUSION
It can be concluded from the research study that is based on identifying the applicability
of statement's that states about the annual report. The above reports are not in the favour of this
statement but various issues have brought up which needs to be resolved with the passage oftime.
Role of an entity gets increases when appropriate method will be selected in order to strengthen
the reporting framework of the existing annual reports prepared by the business in order to gin
higher market advantages.

REFERENCES
Wang Xia and Wu Min. (2011). The quality of financial reporting in China: An examination
from an accounting restatement perspective. China Journal of Accounting Research, Vol. 4.
pp. 167-196.
Ghazali, N.A.M. (2010). The importance and usefulness of corporate annual reports in Malaysia.
Gadjah Mada International Journal of Business, Vol. 12 No. 1, pp. 31-54.
Alzarouni, A., Aljifri, K., Ng, C and Tahir, M, I. (2011). The usefulness of corporate financial
reports: Evidence from the United Arab Emirates. Accounting & Taxation, Vol. 3 No. 2, pp.
17-37.
Valle de Souza, S., Dollery, B.E. and Kortt, M.A., 2017. A critical evaluation of Australian
mineral resources rent tax. International Journal of Public Administration. 40(6). pp.472-480.
Roth, M., 2017. Top Stocks 2017: A Sharebuyer's Guide to Leading Australian Companies. John
Wiley & Sons.
Truby, J. and Kratsas, G., 2017. VW’s ‘Defeat Devices’ and Liability for Claims for Lost
Emissions Tax Revenue. Global Journal of Comparative Law. 6(1). pp.1-24.