Annual Reports: Financial Performance & Strategic Plans for Shareholders & Stakeholders - Essay Sample

Introduction

Annual reports comprise formal financial statements published yearly and availed to the shareholders and other interested stakeholders to make financial judgments and decisions based on the performance (Li, 2008). Notably, the reports evaluate and analyze the current year’s operations and communicate the corporation’s strategic plans in the subsequent year. Moreover, the report should focus on financial performance and have an effective organization to enable users of such reports to understand and interpret the results thereof easily (Li, 2008).

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Organizational Differences

The annual reports of Ambac Financial Group Inc. and American Financial Group Inc. have different organizations. The Ambac financial group begins its report by giving a brief overview of the company and its subsidiaries and proceeds to mention the values, mission, and vision statement. On the other hand, American Financial Group Inc commences the report with the core values and expression of how important the shareholders are to the organization. The expression of shareholders’ statement is ideal, but it does not consider the interest of other parties; hence Ambac Financial Group is ideally organized in an effective and an ‘all-inclusive’ manner for existing and potential stakeholders. Moreover, Ambac Financial Group Inc starts by giving a brief overview of performance highlights of the current period’s financial performance and within the report giving detailed analysis accompanied by financial graphs and easily interpreted images. On the other hand, American Financial Group Inc gives a detailed presentation of the current period’s performance after which the current performance is compared to the performance of other previous periods and overall industrial performance. Ambac concludes the annual report by comparing its performance with other previous financial years while the American Financial Group concludes by communication of investment plan for the next year.

Presentation of Data

The two financial groups have communicated the financial performance in a precise manner that enables users of the information to draw sufficient conclusions on the performance of the company. Detailed reports may be cumbersome and tiresome to read and draw viable conclusions; hence the reports have been organized into four major subsections. The reports have explored the current year's performance which is arguable the most area of interest to the shareholders. Further, the reports have drawn a comprehensive comparison of the group subsidiaries and the previous year's performance. This gives the users of the information opportunity to evaluate the trend analysis on how the corporation has been performing in the previous years and comparison, to other organizations in the same industry. The reports have also highlighted corrective actions on corporation performance deviations, especially on the subsidiaries. They have communicated the next plans for the shareholders, including strategies to be implemented to increase shareholders’ value.

Goals, Challenges, and Plans Top Managers Emphasize in Their Discussion of Results

In both reports, top management has shed insights on the strategies of continued growth and long-term sustainability. The Ambac group has communicated its investment strategies for the coming years. American Financial Group has also highlighted areas of maintaining long-term sustainability and competitiveness in the industry. Moreover, the managers also communicate any changes in management and challenges, including change in taxation policies that negatively impact performance (Buzby, 2014).

How Format and Organization Enhances or Detracts the Information

The annual report of Ambac Group is organized in a streamlined one-page format that enhances the information being presented effectively and allowing the user to capture all relevant information. On the other hand, the America Financial Group report is organized in both doubled and single introductory and conclusion page formats that may distract the user from capturing all the information.

References

Buzby, S. L. (2014). Selected items of information and their disclosure in annual reports. The Accounting Review, 49(3), 423-435.

Li, F. (2008). Annual report readability, current earnings, and earnings persistence. Journal of Accounting and economics, 45(2-3), 221-247.