Evaluation of the chairman report for AL MAZAYA HOLDING CO - Essay Example

Evaluation of the Chairman Report for AL MAZAYA HOLDING COMPANY al Affiliation Evaluation of the Chairman Report for AL MAZAYA HOLDING COMPANY1. Timeliness (3): Very Good The auditor signed the financial report at the end of the year, and the chairperson prepared his report at the beginning of a new year. To be precise, the auditor signed the financial report on Dec 31, 2013 while, on the contrary, the chairperson prepared the report at on Jan 31, 2014. Even though the date of the chairperson’s signature is not explicit, the opening statement of the letter confirms that the report was prepared at the beginning of the year.

On 26 January 2014, the Board of Directors authorized the publication of the company’s financial report (Al Mazaya Holding Co., 2014). It implies that gap between the auditor’s signature and that of the chairperson was one month. One month is a short time and it enhances the timeliness of the company’s chairperson report thus improving the relevance of such information to users such as investors. The precision of the chairperson’s report enables the users of such information to base their decisions on current information rather than outdated information.

Thus, it is easy for users of financial information to assess how much the company’s financial situation has changed since the publication of the financial statements. In this case, the information presented in the chairperson’s report reflects the information contained in the financial statements because of its precision. 2. Past Information (1): Satisfactory The balance between past information and future information is 92.3 percent. The chairperson’s report focuses more on past information than future information.

For instance, he reflects on the promise the company made at the beginning of 2013 and reminds the reader that the company has fulfilled its promise. Additionally, the report primarily focuses on the company’s achievement in the year 2013. Approximately twelve sentences talk about the past while on the contrary only two sentences discuss the future. The chairperson is obsessed with the past because the company recorded stellar performances in its operations. For example, the company achieved a 2000 percent increase in profits.

It is amazing to see a company record such performances and investors must be glad that their investments yielded high returns. Past information is important for the company because it attracts new investors who will be willing to buy shares in the company because of its stellar record. However, there should be a balance between the past and the future so that investors can acquaint themselves with where the company is coming from and where it is heading. Thus, the chairperson fails to give a roadmap for the company’s future operations.

Pundits may interpret such a situation as a company’s lack of vision (Fridson, Alvarez & FinancePro., 2011). 3. Future Information (1): Satisfactory The balance between future information and past information is 7.7 percent. There is little focus on future information. In fact, the chairperson only mentions the future when he notes that the year carries a lot of optimism and hope. Most of the time, the chairperson talked about the past and the present. The rationale was to enhance the relevance of the information.

In addition, the chairperson should not focus on the future because there is nothing he can report about it. The company is yet to unlock any of its potential. The report from the chairperson is relevant to the extent that it has been published after the publication of the financial statements. His role is to review the company’s past performance with little focus on the future unless presented in the financial statements. One of the reasons for the chairperson’s little focus on future information is that he is excited about the company’s excellent performance in the past.

Thus, he spends more time glorifying the company’s past that its future. However, there should be some focus on the future so that investors can be aware of the plans of the company. References Al Mazaya Holding Co. (2014). Annual Report 2013: Al Mazaya Holding Co. K.S.C Holding and Its Subsidiaries. Kuwait City: Al Mazaya Holding Co. Fridson, M. S., Alvarez, F., & FinancePro. (2011). Financial statement analysis: A practitioners guide, fourth edition. Hoboken, N.J: John Wiley & Sons.