It must contain the general overview of the industry that the firms are involved (Stittle). It must also incorporate audited statements of income, financial positions, the flow of the cash and notes on the declarations providing information for several items in the line. The discussion and analysis of the management of the financial position and the results of the firm for the previous two fiscal years must also be included. A straightforward and short description of the most recent year should also be in the reports alongside the information relating to the various segments of the business. The market price of the firm's stock, as well as the dividends paid and the listing of the company's directors and the executive officers, is also necessary. Annual reports are the crowning of corporate communication in the public sector.
A Form 10-k is an annual report that provides a detailed summary of the financial position of a firm. Despite having a similar name as the annual report, the Form 10-K must be sent to the stakeholders when it holds an annual meeting to pick managers. Information included in the 10k ranges from company history, the executive compensation, equity, audited financial reports, and the organization structure. The form must be submitted as stated by Securities and Exchange Commission at the end of the fiscal …show more content…
The stakeholders rely on the financial statements to evaluate the performance and the sustainability of the business operations for the present and future. For this reason, financial statements need to be as accurate as possible. Reviewing the annual report to make it fair and precise to the stakeholders is quite a process.
The validation requires the use of the balance sheet so as to check the financial condition of the business in a particular time frame. The step involves analyzing how the particular company manages the assets, liabilities and the equity in its possession. Asset = Liability+ Equity is the core equation of a balance sheet
The second step in ensuring the validity of the financial statements is to analyze the report of the income statement and comprehend the overall performance, the profits and losses of the particular business in a specified time (Gibson). This analysis consists of revenue, expenses, earnings before tax, the revenues and the profits after tax. Putting into consideration arguments such as the income alone does not equate to profitability ensures more accurate financial