Annual financial reports are financial statements issued to the shareholders of any given company and regulatory bodies. These reports are generated yearly based on the calendar or the company’s fiscal year. It is a requirement for publicly traded companies to issue reports at interim periods within a year and also a comprehensive report on the closure of a financial year. These financial reports mainly comprise of a balance sheet, income statement, statement of cash flows and statement of retained earnings. These reports enable both investors and creditors to make viable business decisions pertaining their operations. This paper will analyze how effectively these reports have conveyed their information.
The paper will cover the financial reports of Nestle Pakistan and Engro Foods for the 2011 financial year. Nestle is a company that has been operations for well over a century being founded by a merger that occurred in 1905. Its first line of products was condensed milk and infant formulas, but it has now expanded its operations to incorporate many products such as coffee, breakfast cereals, bottled water, pet foods, etc. Engro Foods joined the food industry in 2005 as a venture by the Engro Group to diversify its operations. Engro Foods entered the market in the milk processing sector and also engages in corporate social responsibility to alleviate poverty within milk collection areas. They do this through helping members of the community adopt integrated farming methods coupled with livestock development (Engro Foods, 2011).
The financial reports submitted at the closure of the year are both comprehensive and can convey the required information to the shareholders. They both boast of a chronological flow of information that follows the required format for these reports. They employ the use of visuals to communicate the information more vividly. The use of pictures breaks down the monotony of the report making it more colorful, less boring and these images also help to convey additional information e.g. locations, the board of executives, types of product and design, etc. The Nestle report has however out done the Engro Foods report in regards to colorful visualization making their report more inviting to the reader's eye.
There are also notable disparities between the letters from the Chief Executive Officers (CEO) with Nestle Pakistan boasting of a more comprehensive message from the CEO. This message is preceded by another message from the chairman (Nestle Group, 2011). Engro Foods, on the other hand, showcases a different format for this message with the CEO’s message preceded by that of the former CEO. The CEO’s message from Engro Foods looks a bit more inviting to the eye because it has utilized more visuals of both color and images more than Nestle Pakistan. However other than the few differences both messages can recap the major milestones of their business year based on previously set objectives.
In both scenarios, the reports strive to convey to the reader information that is well balanced and presented in the easiest possible way. Engro Foods have a bulkier report, but it is easier to understand as compared to Nestlé’s report. It has been made more interesting through the use of color and more images that attract the readers’ attention. They have also tried to breakdown the information more relaying it in different ways to suit different readers. In overall, the Engro Foods report seems more convincing than the Nestle report.
Reference
Engro Foods Limited. (2011). Annual Report 2011. Retrieved from http://www.engrofoods.com/downloads.html#
Nestle Group. (2011). Annual Report 2011. Retrieved from http://121.52.153.178:8080/xmlui/handle/123456789/9710
