July 2, 2015

No more lost in numbers

According to the article by Jill Treanor in theguardian.com on June 9, 2014, The Financial Reporting Council in the UK, which oversees corporate governance codes and accounting standards, has published new guidelines urging companies to produce clearer and more concise information. The idea, according to the article, is to reduce the amount of verbiage in annual reports.

The new section containing a strategic report has been introduced and Melanie McLaren, executive director of codes and standards at the FRC, said it should be concise enough to be read over a “decent cup of coffee”. The strategic report is intended to summarize the business model and any risks the company faces.

Irrespective of a company’s size, if you want to buy shares you have to understand the business model and risks. A lot of unnecessary information on glossy paper prepared by a financial adviser and packaged by an advertising company is not of much help to the investor.

With these new guidelines, you, as the investor, have the chance to quickly understand exactly what you are reading, without any additional professional help.

If you are a business owner wanting to take your company to the market, you need to make things clear, too. Potential purchasers of your business are buying the future and for them it is crucial to understand if your business model will still be functioning tomorrow, and what problems they might be facing. Sell the future, but make your company’s potential crystal clear.

The article by Jill Treanor: Financial Reporting Council wants clear and concise annual reports

The oldie of the week: Yazz and the Plastic Population (cover) – The Only Way Is Up (1988)

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