Financial Strategies

Abstract

So far we have considered the objectives of the enterprise, a comprehensive strategic analysis of the situation faced by the firm and the variety options open for the firm’s future development. We have already seen (Chapter 5) that the financial statements are one of the crucial documents used by both management and owners, or potential owners, to evaluate the success or otherwise of the enterprise. Indeed Lee and Tweedie’s research shows the importance of the annual report as being the key document used by institutional investors in evaluating corporate performance (Lee and Tweedie, 1981). Furthermore, Briston and Dobbins estimate that the institutional investors combined will own over 50 per cent of the quoted equities in UK-registered companies by 1977 and over 70 per cent of UK equities by 1990 (Briston and Dobbins, 1978). Therefore the picture presented in financial statements is of vital concern to those involved in formulating a suitable strategy for the organisation.