The narrative section of a companys annual report provides users with Essay

The narrative section of a companys annual report provides users with useful information on the companys performance and prospects - Essay Example Thus, a quality narrative report about a company is extremely essential for sound assessments and evaluation; it creates a platform for the organization to be evaluated when on matters that deal with corporate governance and company performance. Corporate governance is always deemed to improve the organization’s long tern outcomes. Narrative reporting has a number of significances to the firm, shareholders, potential customers, lenders and investors. To start with, a narrative report is deemed as a document for the potential investors and lenders. An accurately prepared narrative report provides the organization with a document that can be presented to the lenders and investors who have expressed their interest in the company’s business or even potential stakeholders that can be approached for funding. Thus, preparing an objective and clear narrative report for the purposes other than evaluation of the firm’s general progress is useful as it can be presented to other parties outside the organization. Secondly, a narrative report is useful since it enables the company to reflect on the direction a business has taken in both previous and present years. A number of questions and comparisons must be drawn so as the report can cover or rather answer many of the questions being asked by the organization or the public. The way this information is presented, it must be easily understood by both the members of the organization and the public in order to communicate its intentions (Yeoh, 2010). In addition, a narrative report that has a snapshot of the organization’s capabilities trend that traces all the transactions or activities in previous years. Thus, this document will provide useful information that can act as proof whether the company has always been operating within the affordable or sustainable margins that earn it reasonable profits (Anderson, 1981). Furthermore, a narration report that includes