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Why might these recipients need or want the information contained in the annual

report?

Company annual reports provide information on the health of the company to shareholders, stakeholders,
the media and the community. Understanding the purpose of the annual report can help ensure that the
report contains pertinent information for the company. Shareholders need financial statements to evaluate
their equity investments and help them make informed decisions as to how to vote on corporate matters.
When evaluating investments, shareholders are able to glean meaningful data found on financial
statements. There are a number of tools shareholders can use to make equity evaluations, and it is
important for them to analyze their stocks using a variety of measurements. Available
evaluation metrics include profitability ratios, liquidity ratios, debt ratios, efficiency ratios and price ratios.

What information is contained in the report? Describe the contents and explain what it
disclosed about the organisations financial activities during the year.

An annual report provides information on the companys fiscal year. Graphs or charts can be included to
break down complicated information and make it more understandable. Annual reports include a balance
sheet, income statement, financial summary and cash flow statement. Financial notes also may be added
to explain accounting methods the company uses to report and record its transactions. Additional
information found in notes may detail how the company allocates pension plan contributions, how
equipment has depreciated over time or more detailed information about stock option compensation. In
addition, annual reports provide information on the companys mission and history and summarize the
companys achievements in the past year. While financial achievements are included, other achievements
also are noted, such as research advances, market share gains or honours awarded to the company or its
employees. The achievement section also may include information on such things as sales increases or
new machinery that increases profitability and productivity.

Is there any evidence that those within the organisation used consolidation or
conversion procedures to analyse the financial data which was available?

The annual report provided insights and financial details and achievements specially sectioned at the
investors' pages to detail the corporate achievement during the financial years. The consolidation parts are
clear in a sense that the achievements made by the company and the organisational pursuits for the
objective and strategies are clearly divided into strategic sections, to show respective part of the strategic
directions and their performance level and potential directions in the future. In addition, the financial
performance is clearly stated with exact numeric figures and divided into several different criteria such as
cash flow, total assets, working capital, total debt figures, market capitalisation, stock prices and many
more to make things more specific to the readers and audience.
Has the organisation disclosed any asset or liability valuations? If so what do they
indicate?

As mentioned above, the organisation has clearly stated its achievements in terms of specific fields or
business criteria that it operates within, such as its liabilities, equity, assets and stock market prices. For
example, the annual report context specifically mentions that its total consolidated revenue in 2016
decreased 2.2 percent as reported and 1.6 percent year to year adjusted for currency. Annuity revenue
increased as reported and adjusted for currency while transactional revenue declined year to year. In
addition, acquisitions completed in the past 12 months contributed to revenue growth. In addition to these,
there are also several asset or liability valuations mentioned in the report as well. They indicate positive or
negative performance achievement that the company has made and demonstrated to the readers and
audience.

https://www.ibm.com/annualreport/2016/images/downloads/IBM-Annual-Report-2016.pdf

Is there any indication of any discrepancies, unusual features of queries about the
financial data? Describe.

From the annual report observed, there seems to be no form of any discrepancies or unusual features
demonstrated, as the annual reports have to be proofread multiple times before officially publishing to the
audience. The report contains crucial data and information to be delivered to the investors and other
stakeholders, so the information must not portray any form of discrepancies, and this annual report
apparently shows consistent datasets and information.

Does it appear that the organisation claimed all available benefits and allowances?
Explain.
It seems that there is a section that talks about the compensation for allowance and benefits. The annual
report specifically mentions in a section that selling, general and administrative (SG&A) expense is charged
to income as incurred. Expenses of promoting and selling products and services are classified as selling
expense and include such items as compensation, advertising, sales commissions and travel. General and
administrative expense includes such items as compensation, legal costs, office supplies, non-income
taxes, insurance and office rental. In addition, general and administrative expense includes other operating
items such as an allowance for credit losses, workforce rebalancing charges for contractually obligated
payments to employees terminated in the ongoing course of business, acquisition costs related to business
combinations, amortisation of certain intangible assets and environmental remediation costs.
Did the organisation record details of its income and expenditure? Is evidence
provided? Provide details.

According to the annual report, the organisation apparently achieved operating earnings per share of
$13.59 and free cash flow of $11.6 billion. It also indicates that it invested heavily for the long-term
competitiveness, nearly $6 billion in research and development, nearly $4 billion in capital expenditures
and nearly $6 billion to make 15 acquisitions, adding to the capabilities in the high-growth areas of
cognitive, cloud and security. It mentions that it has returned $8.8 billion to its investors and shareholders,
including dividends of $5.3 billion and $3.5 billion in gross share repurchases. It raised the dividend for the
21st consecutive year.

Examine the financial summaries for information about the financial status of the
organisation. Did the organisation show a profit?

According to the annual report, within Technology Services & Cloud Platforms, total 2016 strategic
imperatives revenue of $8.7 billion grew 39 percent as reported (40 percent adjusted for currency) year to
year. Cloud revenue of $5.9 billion grew 49 percent as reported (50 percent adjusted for currency), with an
as-a-Service exit run rate of $5.8 billion. Technology Services & Cloud Platforms gross profit margin
decreased 0.8 points to 41.9 percent in 2016 compared to the prior year. While partially due to mix within
the segment, there was improvement in the Infrastructure Services margin offset by declines in Technical
Support Services and Integration Software. The margin improvement in Infrastructure Services reflects the
benefits from delivery transformation and ongoing productivity actions related to automation, process
optimization and leveraging the companys scale, technology and talent. In general, the annual report
shows its profit level in terms of points to simplify the understanding, and it has made some profits
apparently.

What sorts of recommendations are made and what suggestions are made regarding
business activities for the upcoming year? Are they constructive?

The annual report states that IBM is changing industries around the world. Watson on the IBM Cloud is
available to more than 200 million consumers to answer questions, find what they need online and make
recommendations. Half a million students can choose courses and master a subject with Watson, which
also helps teachers address each students unique learning needs. IBM Securitywhich monitors 35 billion
security events a day for 12,000 clients spanning 133 countries launched the worlds first commercial
cyber range, where clients can simulate and prepare for real-world attacks and draw on the power of
Watson to fight cybercrime. The recommendation is based on the market field that the organisation is
proficient at and therefore should move forward quickly to excel and provide the best service in this field to
the customers.
Is the report and any recommendations clear and logical?

The annual report seems to lack in the part specifically for recommendations. However, throughout the
sections, it mentions what can be improved and what the root causes apparently are for the performance
issues and levels. However, in terms of financial figures and performance level indication, the annual report
shows good precision and accuracy for its achievement.

Has the organisation complied with its statutory requirements? Explain.


According to the annual report, it mentions that the company records deferred tax assets for awards that
result in deductions on the companys income tax returns, based on the amount of compensation cost
recognized and the statutory tax rate in the jurisdiction in which it will receive a deduction. Differences
between the deferred tax assets recognised for financial reporting purposes and the actual tax deduction
reported on the income tax return are recorded in additional paid-in capital.