British American Tobacco: Financial Information for External Users

This report provides a financial analysis of British American Tobacco (BAT), a UK-based company operating since 1902, focusing on its financial statements and their significance to various external, non-management users. The report examines how financial information meets the needs of five key external user groups: investors, regulatory agencies, trade creditors, employees/trade unions, and customers. It also highlights the weaknesses of financial information for each user group. Furthermore, the report discusses the qualitative characteristics of financial information, including understandability, reliability, relevance, comparability, and timeliness. The conclusion emphasizes BAT's strong performance while acknowledging areas for improvement and the importance of accurate financial reporting for external stakeholders. The report utilizes academic journals and books to support its analysis.

Business

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Detailed elaboration and examination of the information that is related with finance and how it
meets the requirements of five different external users that are of non-management in nature..1
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Accounting in business carriers a lot of value as it helps in identifying, recording, reporting,
summarising, analysing, and interpreting all the relevant things that are necessary in a business
firm so that it can add value to the company in the long run (Bratianu and Vatamanescu, 2017). It
helps the firm to take appropriate decisions that can further prove beneficial for the organisation
in increasing its performance that can result in improved profitability and growth in the market in
which it is operational. In this report there is a brief discussion of a firm named British American
Tobacco that is geographically located in the UK and is operational since 1902 and deals in
cigarette, nicotine, and tobacco products. Apart from this the report also covers a detailed
elaboration of the five non-management external users in the company.
MAIN BODY
Detailed elaboration and examination of the information that is related with finance and how it
meets the requirements of five different external users that are of non-management in
nature
Financial statement is one of the most important as well as crucial aspect for each and
every firm that is operation in the market as it is related with the allocation and allotment of
funds in an appropriate manner so that it can add value to the firm in the market. There are many
external users and the ones that are explained below are as follows-
Investors- They are the individual or group of persons or an organisation that invests
money in the business so that it can fetch higher rate of return and can prove beneficial in overall
conditions. Investors take cue from the financial statement that the company is performing up to
standards or not and then invest their money so that it can give better returns in the near future as
compared to other assets.
 Weakness of financial information- The main disadvantage of this is that it can
sometimes give a false picture of the enterprise and thus making people invest in it which
can result in heavy losses in the future.
Regulatory Agency- These are agencies that are formulated specially to check all the
activities that are performed by the company in order to assure that all the works that are done in
the firm are legal and the organisation does not go beyond the authorities.

 Weakness of financial information- The reports that are send by the companies often
carry a lot of omissions that results in fraud which hampers the overall working.
Trade Creditor or Supplier- These provide raw material to the company so that the firm
can work in a smooth manner without any complications. They check the positioning of the
enterprise that it will be able to pay off in time or not and the credibility of it also checked before
doing any business (Helms, 2016).
 Weakness of financial information- Many a time’s misleading information is given to
suppliers resulting in hampering the performance of the company in the long run.
Employees and Trade Union- These are the individuals that work for the company and
they are also interested in the financial statement as it helps in determining their future in the
organisation. If company is well placed then there are high chances of increased salary, perks,
benefits, etc. as compared to the one that is not well settled in the market.
 Weakness of financial information- Misleading information can be given to the
employees too while hiding the real secrets and thus it results in decreased performance
of the company in the industry.
Customer- They are the buyers of the goods and services that the company provides and
they are also interested in the financial information as they purchase products of companies that
are performing exceptionally well in the market.
 Weakness of the financial information- Information that are provided to them can often
be misleading resulting in the decreased market value and image of the company.
Qualitative Characteristics- These are characteristics which makes information useful to the
users of these financial reports and these are explained below-
Understandability- The financial report or the annual report that is presented in front f
everyone must be easily understandable and must carry important points that can carter the
requirements of the prospective individuals (Schaltegger and Burritt, 2018).
Reliability- The information that is provided must be reliable enough and must not carry
any sort of error so that it can help in building a good image of the company in front of each and
everyone.
Relevance- The information that is presented in front of everyone must be related to the
company and should help in analysing the true financial position of the firm so that investment
decisions can be taken appropriately.

Comparability- The information must be presented in such a manner so that it can be
compared easily with other firms without any complications.
Timeliness- The report must be presented well within time so that the decision of
investment can be taken in an appropriate and precise manner (Vitalis, 2018).
CONCLUSION
From the above it can be concluded that the firm British American Tobacco is performing
very well in the industry but still there is a scope of improvement that can help the firm to grow
and prosper in the market. Apart from that it can be concluded that there are many external users
of the financial statement that are of non-management in nature and thus it is very important to
present these information’s in an accurate and precise manner so that it can help the company to
perform in a better way as compared to its competitors.

REFERENCES
Books and journals
Bratianu, C. and Vatamanescu, E. M., 2017. Students’ perception on developing conceptual
generic skills for business. VINE Journal of Information and Knowledge Management
Systems.
Helms, T., 2016. Asset transformation and the challenges to servitize a utility business model.
Energy Policy. 91. pp.98-112.
Schaltegger, S. and Burritt, R., 2018. Business cases and corporate engagement with
sustainability: Differentiating ethical motivations. Journal of Business Ethics. 147(2).
pp.241-259.
Vitalis, R., 2018. When capitalists collide: business conflict and the end of empire in Egypt.
University of California Press.