Company performance
Why is it important to know how your
company performes?
 Companies need to know how they are
performing in order to analyse problems, find
solutions and make plans for the future.
 Management accounts provide data about
operational efficiency
 Financial accounts show how net lending or
borrowing is achieved by financial transactions.
It also records transactions in external assets
and liabilites. Financial account consists of direct
investment, portfolio investment and reserve
assets.
 Financial accounts also give information about
revenue the company receives.
 Revenue is the entire amount of income before
any deductions are made. It is the amount of
money ( both cash and non cash) that a
company actually receives from its activities,
mostly from sales of products or services to
customers.
 With this information a company can then
calculate how much money it has made (profits)
or how much it has lost (losses) during a specific
period.
The companies whose shares are sold on
the stock exchange are called:
Listed companies
These companies have to present their
accounts to the public in an annual
report. The annual report is the formal
financial statement issued yearly by a
corporation. It shows asstes, liabilities,
revenues, expenses and earnings how the
company stood at the close of the
business year.
The annual report also:
 Discusses the company’s financial affairs and
performes a useful function in a free market
system because it transmits information from the
company to its shareholders and investing
public.
 Although the report is addressed to
shareholders, other people who have a stake in
the business (employees, suppliers, customers
and lenders) will also find it informative.
A typical annual report consists of:
 Auditor’s report: This summary written by
independent public accountants shows whether
the financial statements are complete, reliable,
and prepared according to generally accepted
accounting principles (GAAP).
 Report of management: This letter, usually
from the board chairperson, takes responsability
for the validity of the financial information in the
annual report.
Financial statements and notes: These
provide the complete numbers for the
company’s financial performance and
recent financial history. The SEC
(Securities and Exchange Commission)
requires: statemant of earnings, statement
of cash flows and statement of financial
position.
 Management discussion: This information
summarizes a company’s financial condition and
performance over five years or longer, including
gross profit and net earnings (net income).
 Selected financial data: This series of short,
detailed reports discusses and analyses the
company’s performance. It covers results of
operations, and the adequacy of resources to
fund operations.
 Board of directors and management: This list
gives the names and position titles of the
company’s board of directors and top
management team.
 Stockholder information: This information
covers the basics-the company’s headquarters,
the exchanges on which the company trades its
stock, the next annual stockholders’ meeting,
and other general stockholder service
information.
 Corporate message: This may be from the
chairperson of the board of directors, the chief
executive officer, or both. It can provide an
analysis and a review of the year’s events,
including any problems, issues, and the
successes the company had. It usually reflects
the busienss philosophy and management styles
of company’s executives, and it often lays out
the company’s direction for the next year.
 Letter to stockholders: Some consider this an
advertisement for the company. However, it
almost always reflects how a company sees
itself, or how it would like others to see it. Here,
the company can explain itself to the
stockholders, using photographs, illustrations,
and text. It may cover the company’s lines of
business, markets, mission, management
philosophy, corporate culture and strategic
direction.
Financial highlights: Problably the most
often-read section of any annual report,
these give a quick summary of a
company’s performance. The figures
appear in a short table, usually
accompanied by supporting graphs.
Nouns and prepositions
Some nouns are always followed by the same
prepositions. Match the prepositions with the
nouns below:










The resut
An enquiry
Involvement
An interest
Support
Satisfaction
A percentage
A tax
Research
An effect
 With
 For
 Of
 On
 Into
 In
Complete the following passage with
suitable prepositions:
 A report ___ the performance of the European
vending machine industry shows that companies
have had to invest heavily in the past years in
order to prepare for the introduction ___ the
euro.
 As European national currencies gradually
disappeared to make room for the euro coins
and banknotes, the vending industry had been
discretely conducting research ___ the best way
to prepare for the switchover.
 The findings ___ their studies revealed that most
operators would face two major dilemmas.
 The first question was whether or not to join in
the movement __ electronic money, and to equip
machines with card readers. Some companies
opted early on to do this and one major
European operator had already converted 70%
___ his machines to electronic cash well before
the introduction of the euro. But the trouble ___
this approach was that it involved heavy
expenditure ___ new systems. The alternative
was to retrofit exsisting machines with new
electronic chips that could recognise the coins.
Another worry was whether the national
authorities would make enough of the new
coins available for the customers to use.
While national governments had
responsibility ___ minting the coinage, in
some cases they did not have the capacity
to produce the millions of coins that were
necessary for a smooth transition ___ the
new currency.