acc 230 week 8
Axia College/ ACC 230
Week 8 Presenting to stakeholders
The Shareholders are going to be interested in the financial health of the company so it will be important to focus on profit ratios and return on investments. When evaluating a company’s financial health it is important to evaluate all positive and negative financial instances. When I meet with the design crew, investors, and CEO I will suggest that we paint an honest picture of our financial health. In accordance with the SEC and Sox act, it is our fiduciary responsibility to divulge all financial information even if it is negative. With that being said it is also a good idea to elaborate on the good points. We have seen some dives in our profit outputs but it will be important to highlight what caused the decline. Our investments and expansion plan will outline how our profits should rebound and increase in the years to come. Points like the capital structure, liquidity, strengths, weaknesses, plans to improve in the future, and profit ratios compared to industry averages are all important topics to consider when presenting an annual report to stakeholders (Fraser & Ormiston 2007). Some examples of important financial data to pay attention to consist of liquid ratios, current ratio, cash flow ratios and the average collection period. Liquid ratios are used to determine if a company can come up with enough cash to cover unexpected expenses. For example if something came up cold the company sell stock or liquidate assets to cover them. Comparing this ratio against industry averages would be a good way to judge if the company in question has sufficient liquidity. Watching the cash flow ratio can provide insight into the operating activities and REC has improved from 06’ to 07’. Another category that has improved is its collection period. The data shows that the average collection period is five day shorter than the previous year. These are all
Week 8 Presenting to stakeholders
The Shareholders are going to be interested in the financial health of the company so it will be important to focus on profit ratios and return on investments. When evaluating a company’s financial health it is important to evaluate all positive and negative financial instances. When I meet with the design crew, investors, and CEO I will suggest that we paint an honest picture of our financial health. In accordance with the SEC and Sox act, it is our fiduciary responsibility to divulge all financial information even if it is negative. With that being said it is also a good idea to elaborate on the good points. We have seen some dives in our profit outputs but it will be important to highlight what caused the decline. Our investments and expansion plan will outline how our profits should rebound and increase in the years to come. Points like the capital structure, liquidity, strengths, weaknesses, plans to improve in the future, and profit ratios compared to industry averages are all important topics to consider when presenting an annual report to stakeholders (Fraser & Ormiston 2007). Some examples of important financial data to pay attention to consist of liquid ratios, current ratio, cash flow ratios and the average collection period. Liquid ratios are used to determine if a company can come up with enough cash to cover unexpected expenses. For example if something came up cold the company sell stock or liquidate assets to cover them. Comparing this ratio against industry averages would be a good way to judge if the company in question has sufficient liquidity. Watching the cash flow ratio can provide insight into the operating activities and REC has improved from 06’ to 07’. Another category that has improved is its collection period. The data shows that the average collection period is five day shorter than the previous year. These are all
References: Fraser, L. M., & Ormiston, A. (2007). Understanding financial statements (8th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.