Financial Report Analysis: Stakeholder Information and Costing Methods

This report provides a comprehensive analysis of financial reports, focusing on the fundamental and qualitative factors that are essential for understanding financial statements according to IFRS. It examines how these factors, such as relevance, faithful representation, comparability, verifiability, timeliness, and understandability, impact stakeholder decision-making. The report also delves into marginal costing tools, specifically contribution per unit, break-even point, fixed costs, and variable costs per unit, illustrating their application in short-term decision-making processes. By exploring these concepts, the report aims to provide insights into how financial data can be effectively utilized to improve business performance and inform investment decisions. The report concludes by emphasizing the importance of accurate and timely financial reporting for all stakeholders.

FINANCIAL REPORT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Fundamental factors...............................................................................................................1
Qualitative factors..................................................................................................................2
TASK 2............................................................................................................................................3
Contribution per unit..............................................................................................................3
Break-even point....................................................................................................................3
Fixed cost................................................................................................................................3
Variable cost per unit..............................................................................................................4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Financial reports contain all the legal and authenticated information about the company.
This in turn also provides information to the stakeholder related with gross annual turnover and
the various planned budgets of the company. These can benefited the investors to track the
financial data provided by the auditors on the disclosure of the financial statements of the entity.
Bu this, investors or stakeholder would become able to take corrective decisions which will be
fruitful for the company in building the brand image and better financial strength in the market.
In this, report will shed light on the fundamental and qualitative factors that are related to
accounting as per IFRS. Besides this, it will also provide deeper insight about the manner in
which marginal costing tools aidin decision making.
TASK 1
Financial report furnishes necessary information to the various stakeholders as they
would become able\to make their decision associated with an organisation (Cascino & et. al.,
2014). The reports are necessary for the managers or professional heads of the entity as it helps
them in planning the budgets and better financial changes which will enhance the productivity as
well as as profitability of the business. There can be various characteristics of the financial report
that will help in providing the beat financial data to investors which are as follows:
Fundamental factors
Relevance:
Information provided in the financial report are to be very relevant and liable that can be
helpful in making the efficient judgement regarding planning for costs and budgets to be fixed by
the organisational heads (El-Haj & et. al., 2014). According to the financial data the necessary
decisions can be made as to improve the economic condition of the business and helps the
managers in taking the corrective steps to enhance the internal or external environment of firm.
The information can be fruitful for stakeholder if it has the relevant data regarding Predictive and
Confirmatory value which helps in pre examine future outcomes and facilitate user of the
accounts to know or confirm the predictions or actual data.
Faithful Representation:
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Financial information that will be provided by the firm to stakeholders include, banks,
government, shareholders, consumers and various investors mustbe presented correctly,
complete and authenticated. It creates faithfulness in stakeholders and they can take decisions
regarding investment in the firm (Baker & Haslem, 2015). They can take information about
company's turnover, investments in new plans, inventory and share value etc. these are the
information which helps individuals who are at the top level posts in making the corrective
business plan for the firm. In addition to this, sources that are provided in report are must be free
from errors and neutral so the corrective decision can be taken as to increase the economic power
of the entity.
Qualitative factors
Comparability:
Proper maintenance of the financial data or accounts facilitates stakeholder to make
comparison between a company's past records with its current records. The comparison of
financial written documentss can be done with the internal or previous reports of the organisation
as well as with the external reports of the other business entities (Authority, 2013). It e will help
the stakeholders in getting the better knowledge regarding the growth or downfall of particular
company. Comparison is needed in all aspect of financial operations done during the financial
year of the organisation. This in turn proves to be fruitful in gaining the adequate knowledge
about budgets and plans or the firms.
Verifiability:
The validity of the information is to be verified by the auditors of financial report (Preis,
Moat & Stanley, 2013). Before the disclosure of financial data it must be first verified by the
accounting professionals of the organisation that will be helpful for the stakeholders to know the
adequate and validate information regarding company's financial position.
Timeliness:
The factor represents that the financial report must be prepared by the auditors or
accounting heads of the organisation with the less time duration and the disclosure of the
information. It should be very prompt and quick as it will help the stakeholder to get timely
updated with the financial changes in the accounts of company (Greiner, 2015). These will help
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them in making the quick and adequate decisions regarding making investments in the
organisation or not. The reports are to be facilitates in market on the basis of quarterly, half
yearly or annually auditing of the company's accounts.
Understandability:
Information included in the financial reports of the organisation must be easily
understandable by all thestakeholders (Cascino & et. al., 2014). It should be convenient for all
the individuals to get the information correctly regarding financial data about share value,
inventory valuation, gross turnover of the company, share holders, creditors, debtors, assets and
etc.All such information must be certain and cleared in the reports. The adequate and
authenticate data will help the stake holders in making favourable investments in the firm so that
will be beneficial in expanding the funds of organisation.
TASK 2
Contribution per unit
The analysis will help the organisational heads in planning the short term decision
making like it will measure the or calculate the payments made to individual in respect with
recovering fixed cost of the particular product. it can be profitable for the business if the earning
meets the fixed costs of products (Authority, 2013). It can be calculated as the deducting variable
cost of manufacturing the goods with its selling price.
Break-even point
Break even analysis help organisation in making favourable decisions regarding the
demand and supply of the products meets to the equality point where all the costs occurred on
producing the unit meets the prices of their selling value (Preis, Moat & Stanley, 2013). It can be
beneficial in making the favourable short term decision as to maximise the production or to
maximise the prices of such products.
Fixed cost
The fixed can be decided by the managers of the organisaation over the products and that
will always remain same in every aspect of business operations. By fixing the costs of products
will help the organisation in making the favourable comparison between the gains of product
with the costs of manufacturing the end product (Baker & Haslem, 2015). These will help the
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managers in making budgeted decisions and plan strategies as to make improvements in the
products as if it do not meet the fixed costs of the goods.
Variable cost per unit
Variable cost varies as per requirements of the company in accordance with the changes
in demand and supply of goods and services. There must be proper record of the variable costs
occurred in developing a product like labour hours, salary and wages to them and the machine
hours used in manufacturing the products. This can be helpful for the organisations in
minimising the variable costs as in the company is suffering from the losses (El-Haj & et. al.,
2014). The auditors must make positive decisions in regards with making the budgets and fixing
the costs for the organisation. The decisions made in concern with variable costs of products are
fluctuating and varies in timely basis.
CONCLUSION
From the above report, it has been concluded that Financial decisions are to be made by
the stakeholders in respect with reports of statements provided by the organisational auditors.
The report will help the investors in gaining the knowledge about organisation's quantitaive and
fundamental characteristics which will be ebnefcial in making the corrective decisions by all the
individuals who are indulge with the business operations of the firm. The report is containing all
the necessary informations regarding costings of the products like the per unit cost, fixed costs,
variable costs and there comparison will facilitate the better informations.
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REFERENCES
Books and Journals
Authority, F. S. (2013). Annual report 2012.
Baker, H. K., & Haslem, J. A. (2015). Information needs of individual investors.
Cascino, S., & et. al., (2014). Who uses financial reports and for what purpose? Evidence from
capital providers. Accounting in Europe. 11(2). 185-209.
El-Haj, M., & et.al.,. (2014). Detecting document structure in a very large corpus of UK financial
reports.
Greiner, B. (2015). Subject pool recruitment procedures: organizing experiments with ORSEE.
Journal of the Economic Science Association. 1(1). 114-125.
Preis, T., Moat, H. S., & Stanley, H. E. (2013). Quantifying trading behavior in financial markets
using Google Trends. Scientific reports. 3. srep01684.
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