Company Analysis
People who are responsible for statements = Directors
People who look at financial statements
- Current and potential shareholders
- Banks giving out loans
- Directors making future business decisions
King Codes – recommendations of good corporate governance (rules, practices and
processes of directing and managing) to promote economic growth
Acronym ( Don’t take in a red furry snail)
- Discipline
- Transparency (Clear, obvious, visible, understandable statements)
- Independence ( no external influence )
- Accountability (Answerable, responsible, liable)
- Responsible management
- Fairness to shareholders
- Social issues
Non Financial Info – The Triple Bottom Line
Profits
People
Planet
- Help to give positive company image, increasing investor sentiment
Committees in place (Royal bakers and nannies randomly scream)
- Remuneration: makes recommendations on earnings of directors and evaluates
performance of key personnel
- Board : assist directors in decision making
- Audit : appointed by shareholders, not involved in day to day running, independent
audits
- Nomination : formal and transparent procedures in selection of new directors
- Risk Management : Manages risks, ensures a sustainable going concern
- Social and ethics: for popular companies, to ensure ethical operations, good image
Bad corporate governance eg Steinhoff
- Shareholders lose money
- Employees lose jobs
- Decrease value of pensions – no retirement
- Creditors of company won’t be paid
- Banks who loaned company money won’t be paid
Directors
Executive – Employees of company, run it day to day, must prepare financial statements
Non- executive (Independent) – hired by shareholders to look after their interests, provide
independent oversight and are objective advisors / challenge directors to ensure they have
good strategies and decisions
People who are responsible for statements = Directors
People who look at financial statements
- Current and potential shareholders
- Banks giving out loans
- Directors making future business decisions
King Codes – recommendations of good corporate governance (rules, practices and
processes of directing and managing) to promote economic growth
Acronym ( Don’t take in a red furry snail)
- Discipline
- Transparency (Clear, obvious, visible, understandable statements)
- Independence ( no external influence )
- Accountability (Answerable, responsible, liable)
- Responsible management
- Fairness to shareholders
- Social issues
Non Financial Info – The Triple Bottom Line
Profits
People
Planet
- Help to give positive company image, increasing investor sentiment
Committees in place (Royal bakers and nannies randomly scream)
- Remuneration: makes recommendations on earnings of directors and evaluates
performance of key personnel
- Board : assist directors in decision making
- Audit : appointed by shareholders, not involved in day to day running, independent
audits
- Nomination : formal and transparent procedures in selection of new directors
- Risk Management : Manages risks, ensures a sustainable going concern
- Social and ethics: for popular companies, to ensure ethical operations, good image
Bad corporate governance eg Steinhoff
- Shareholders lose money
- Employees lose jobs
- Decrease value of pensions – no retirement
- Creditors of company won’t be paid
- Banks who loaned company money won’t be paid
Directors
Executive – Employees of company, run it day to day, must prepare financial statements
Non- executive (Independent) – hired by shareholders to look after their interests, provide
independent oversight and are objective advisors / challenge directors to ensure they have
good strategies and decisions
