Financial report shows the financial summary of an organization in a given period either quarterly, monthly or semi-quarterly. Some times, people get to make mistakes between financial report and annual report.
Annual report is said to be a more detailed report that shows the comprehensive report detailing a company’s activities through out the preceding year. Looking at both definition, we can see that they are both distinct.
DIFFERENCE BETWEEN FINANCIAL REPORT AND ANNUAL REPORT
Financial analysis which is also know as a financial report. From my research, financial report are historical in nature and records only records only financial transactions.
Annual reports on the other hand shows both qualitative and quantitative transactions of an organization. This best explains why organizations usually gives an annual report at the end of a financial year in other to show a detailed summary of their working year.
- It helps assist managers in taking decisions
- To help access the company current position
- To assist managers plan
In my head, I always thought that only auditors and accountants were able to prepare a financial statement. Little did i know that managers and directors are the ones responsible in a preparing a company’s financial statement.
KEY PARTICIPANT IN THE FINANCIAL REPORT CHAIN SUPPLY
The following are those that are actively involve in the financial reporting chain supply. They are: managers, directors, external auditors, and stakeholders. The managers are the ones who prepare the financial statement for the directors to approve. The external auditors audits its while the stakeholders makes decision base on the financial statement.
Managers, stakeholders and employees are the internal users of the financial statement while the tax authorities, Lenders, Creditors, Auditors, Governments and Journalist are the external users.
Internal users uses the financial statement to plan, evaluate, manage, and control the firms operation while the external users uses it to asses the organisations past performance and current financial position. External users also uses it to evaluate the performance of the management.
It must be understandable
It must be relevance
Easy to compare
It must be real.
There are about four component of a of a financial statement namely: statement of income which is used to ascertain the firms performance. Also, there is statement of cashflow which shows the firms cashflow and outflow. Statement of change in equity measures the changes in owners equity in a given period then finally, statement of financial position is use to ascertain the worth of the firm.
In conclusion, there are benefits and and limitations in a financial report. Some of the benefits are; It provides information about the firms performance and it guides investors too and the limitations are; it is historical in nature and the report does not provide quantitative information.