The data available from the Income Statement and the Balance Sheets are useful for working out various financial ratios for the purpose of analysis with reference to various parameters such as efficiency in performance, profitability, leverage, interest cover or return on capital employed. The comparison for the past three years suggests that though there is increase in sales during 2011 by 2.11% in 2011 and 5.5% in 2010 over the previous years it is not reflecting in gross margin. This is mainly because there has been slowdown in the economy during this period and there has been increase in excise duties, marketing and other operating expenses. Stewardship oriented cash flow statement would indicate the movement of cash in the operations of the business.
The details given in the Annual Report serves the decision useful objective in the areas such as efficiency in working capital management or plough back of profits accrued for long term capital investments. Elliott and Elliott (p. 16) state “Cash flow accounting provides objective, consistent and prudent financial information about businesses transactions. It is stewardship-orientated and oilers a means of achieving accountability over cash resources and investment decisions. Apart from the decision useful information from the Income Statement and the Balance Sheet for the past year(s), the Annual Report furnishes several other details which are very useful for the investors or creditors for taking decisions.
Key performance indicators such as Operating margin, Return on invested capital, free cash flow, details of volume, Earnings per share, market share of the company and performance by the reportable segments (p. 4-7) given by the company serve the decision usefulness objective effectively. The chairman’s forward looking statement reflects optimism in future business prospects.
The Chief Executive has outlined the companies strategies in organic growth and acquisitions and expansion into the international markets with growth potential. The opportunities for growth in the industry as well as challenges faced by the company in various fronts including Corporate Social Responsibilities and the risks involved in the business as outlined in the Business Review, Trend Information and Directors’ Report are the important pointers to the future growth of the company. The increase in the
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