Select one real company and discuss the extent to which its published financial statements meet the objective outlined above.

“The objective of financial statements is to provide about the reporting entity’s financial performance that it is useful to a wide range of users for assessing the stewardship of the entity’s management and for making economic decisions”
(ASB, Statement of Principles for Financial Reporting, 1999).
Select one real company and discuss the extent to which its published financial statements meet the objective outlined above.
Matalan is one of the UK’s leading clothing and homewares retailers. The first store was opened in 1985 in Preston by John Hargreaves. Now Matalan has over 170 stores all over the UK. Its aims to deliver quality goods at, “the equivalent of high street prices. Oxford University recently published a report the “Worlds Top 500 Retailers 2002”. In this report Matalan was positioned at number 3 using the VCQ (value creation quotient)-this is a capital effectiveness ratio. Using a different ratio the REV (Realised economic Value)-the effectiveness to cash generation performance, Matalan came 5th in the world. Overall it seems that this company has had massive success in the discounted clothing market.
There are many potential user groups of the financial statement that Matalan produces annually on the 28th February. Firstly employees may take an interest in to the financial performance of the company. Employees need to know whether the company can provide remuneration and possibly retirement benefits. It also gives an idea to the employee, on the management’s views regarding employment levels and also job security. The workforce Matalan employs increased by 35% on 2002, now in total around 14,200. Relating to this increase in the amount of people employed is the large increase in the expenditure on wages and salaries. This rose from £87.6m to £119.3m, also an increase of around 35%. Matalan also has an Employee Share Option Scheme in which employees can purchase shares in the company for below the market price. This gives the employees the sense that they are getting more involved with the company and may provide them with an incentive to perform better to gain more dividends. However one large omission from the financial statement was the level of bonuses that the directors paid themselves. The amount of wages and salaries did rise 35%, but it was not said whether it had been all on the increased workforce or partly due to large wage increases of those higher up in the company. Also employees are more likely to get regular information updates on the performance of the company through newsletters as annual reports take time to compile and report over a relatively long time.
