Stakeholder Perspectives on Financial Performance
Stakeholders affected by the financial performance of the business include suppliers, managers, and employees. Employees are interested in the profit or loss generated by the business as indicated in the income statement since profits or losses may influence their salaries and wages (Wahlen et al., 2022). Shareholders look at a business’s income statement as they can see the levels of sales generated, the costs of operations, and the profit or loss made for a particular period. Balance sheet statements help shareholders know whether the business’s value has decreased or increased (Wahlen et al., 2022). Community groups look at a business’s balance sheet to see its assets and liabilities, and the income statement to determine whether the business is making a profit or a loss.
Income Statement Trends and CSR Impact
The income statement finds key financial line items required to measure cost. The items include different expenses such as selling, salary, and administrative expenses incurred by the company. According to the income statement of the Rewards Company, there is year-over-year revenue growth.
The revenues generated by the company for the three years are $130,000, $150,000, and $174,090 for 2016, 2017, and 2018, respectively. From 2016 to 2017, the revenues grew by 15.38%, while from 2017 to 2018, they grew by 16.06%. The growth is attributable to the CSR and TBL efforts that create a good reputation for the company in the market.
The salary expense has increased year over year from $24,500 in 2016 to $29,000 in 2017 and $35,000 in 2018 due to management hiring to support TTL efforts and objectives. The company’s TBL strategy is to give back to low-income neighborhoods, as indicated by the amount under charitable donations. Charitable giving has reflected increased support, as the donations have increased from one period to another for the three years by $50.
Balance Sheet Insights and Long-Term Asset Utilization
The accounts receivable for the three years are $9,212, $10,482, and $14,178 for 2016, 2017, and 2018, respectively, indicating that the company is actively collecting its accounts. Non-current company assets include property, buildings, equipment, intangible assets, goodwill, and long-term financial assets. The company is using a LEED-certified building to protect the environment.
The equipment used is new and energy efficient, considering the increased amount used for purchasing equipment from one period to another over the three years. The plant minimizes waste, which is an improvement from the previous period. The property and equipment used in the company preserve natural resources and produce more and safer products, translating to higher profits generated in the business.
An increase in the company’s long-term financial assets indicates it is using them to support communities. The company is better positioned to increase its financial assets by decreasing waste, as indicated by year-over-year growth. The company’s long-term assets are not enough for the business to invest in the funds of TBL companies. The company’s stock portfolio is diversified, considering that its assets are focused on producing high-quality products that meet the tastes and preferences of the targeted customer while enabling the organization to generate more profits.
Summary
By giving back to the community, the company focuses on preserving the environment and participating in corporate social responsibility. The company is managing liabilities to limit short-term interest payments, as indicated by a decline in short-term debt from 2016 to 2017. From 2017 to 2018, the debt increased by a small margin, meaning that the short-term debts are still well managed in the business. There is an increasing trend in the company’s retained earnings, which gives the management an opportunity to reinvest the retained earnings into TBL initiatives.
Reference
Wahlen, J. M., Baginski, S. P., & Bradshaw, M. (2022). Financial Reporting, Financial Statement Analysis, and Valuation. Cengage Learning.