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@trephena mentioned that in topic 4 & 5 the strategic decisions in the chairman’s report needs to link to the ratio analysis. My question is what about American companies as there is no Chairman reports in the 10k, there’s only Management Discussion & Analysis. Could we use this instead?
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And do we use 2018 reports to link to our 2019-2021 ratios as strategic decisions are usually long term? Or do we use each year’s strategic decision for the next year eg. 2018 reports for 2019 ratios?
You will have to make the best of the sources you have – usually there is either mention of some important new strategies in the annual report written parts or special briefings to shareholders [often when the quarter results are released.
With strategies you have to take holistic view. The Board do not sit down on the 1st Jan each year and propose strategies – they more than often span several years e.g, the decision to expand into new markets may be 3 years in the planning though a decision to close a loss making segment may seem to be taken quickly such decisions will be based on results going back several years.
This means when analysing you do not do a cut-off at 31 Dec [or whatever the year end is] each year but analyse the strategies and performances as a continuous period of at least 3 years.
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