Which of the following statements is correct?
A) The annual report contains four basic financial statements: the income statement;balance sheet;statement of cash flows;and statement of changes in long-term financing.
B) Although the annual report is geared toward the average stockholder,it represents financial analysts' most complete source of financial information about the firm.
C) The key importance of annual report information is that it is used by investors when they form their expectations about the firm's future earnings and dividends and the riskiness of those cash flows.
D) The annual report provides no relevant information for use by financial analysts or by the investing public.
E) None of the above statements is correct.

Question

Quizplus · Accepted Answer

The statement that accurately describes the key importance of annual report information is C. The annual report provides vital information for investors to form their expectations about the firm's future earnings, dividends, and the risk associated with those cash flows. Option A is incorrect as the report comprises more than just four financial statements. Option B is partially correct but doesn't accurately reference the primary role of the report. Option D is incorrect as the annual report is a significant source of information for investors and financial analysts.

Which of the Following Statements Is Correct