MemoDate: annual reports will increase the company’s value

MemoDate: January 19, 2018 To: New hires in the accounting department From: Lana Lindstrom Re: How to create Financial StatementsIn an accounting role, Annual Reports of Financial Statements are released to the public in order to view financial progress. Positive results in their annual reports will increase the company’s value in the marketplace, making them more profitable in the future. Below is a description of an effective Financial Statement.  Main elementsThe purpose of Financial Statements is to communicate financial information about their company to potential and current investors. As you know, potential and current investors will analyze the financial health of the company and determine if they believe the company will grow in the future. If they believe the company will grow, they may invest in it. These statements are required to be publicized under GAAP, generally accepted accounting principles, and are released annually. The length of an Annual Report can range from 50 to 200 pages. Financial Statements are found within the Annual Report. The statements include the Balance Sheet, Statement of Cash Flows, Income Statement, and Statement of Stockholders Equity. Each statement is approximately one page in length.The Balance Sheet looks at the assets, liabilities, and capital at any point in time. The Statement of Cash Flows notes changes in cash activity from year to year.The Income Statement records the financial performance for the year. The Statement of Stockholders Equity reports the finances from investors who purchased stock in the company. As you learned in a basic accounting course, the numbers provided on the Balance Sheet, Statement of Cash Flows, Income Statement, and Statement of Stockholders Equity, are derived from simple equations. When given these statements, solving the equations are simple. Also, I am sure you remember how fun it is to see the equations balance. The accuracy and transparency of the reports are very important to maintain trust among investors.Review of ReportsSimilar to the examples given below, the Annual Report from Costco can be found on their corporate website. Companies can chose to organize their reports in different ways. For example, in the most recent Annual Report from Nestle, they featured their Financial Statements in the beginning of the report. Additionally, Target created a unique addition to the cover page of their Annual Report. The page was titled, “Financial Highlights” and is composed of graphs that provide an overview of key information. This addition saves time and is easy to understand for beginners. Lowes Annual Report includes many pictures, logos, and graphic designs to make their report more appealing to the common investor. This addition separates Lowes from the other companies I analyzed. On the contrary, Apple’s Annual Report is very basic and plain.Final ThoughtsIf you have any additional questions after analyzing these reports, please stop by my office or call me at extension 5423. I would be happy to further discuss Financial Statements, or to answer any questions. I truly look forward to working with you all in the future.