Question Every company’s board of directors has a duty to present a financial report at the end of a financial year. The financial report so presented has many interested parties which include debenture holders, employees and stockholders. Each one of these would be pleased to hear of an increase in the profitability of the company. The board chairman of XYZ Plc. reported as follows: ‘ ‘On behalf of the board, it is my pleasure to report that our company has generated operating profits to the tune of K28.6 million despite the high operating costs in the year under review. Our profit before tax amounted to K24.7 million after interest of K3.9 million. It is pleasing to note that the profits have been 12% higher than last year’s. Going forward, it is our desire, as a board, to give priority to areas with the highest return and great growth prospects in our future investment options.’ You are required to give brief reasons why the above three parties would be happy to hear of the increase in the profitability of XYZ Plc.
Question
Every company’s board of directors has a duty to present a financial report at the
end of a financial year. The financial report so presented has many interested
parties which include debenture holders, employees and stockholders. Each one
of these would be pleased to hear of an increase in the profitability of the
company.
The board chairman of XYZ Plc. reported as follows: ‘
‘On behalf of the board, it is my pleasure to report that our company has
generated operating profits to the tune of K28.6 million despite the high operating
costs in the year under review. Our profit before tax amounted to K24.7 million
after interest of K3.9 million. It is pleasing to note that the profits have been 12%
higher than last year’s. Going forward, it is our desire, as a board, to give priority
to areas with the highest return and great growth prospects in our future
investment options.’
You are required to give brief reasons why the above three parties would be
happy to hear of the increase in the profitability of XYZ Plc.
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