馃攳
Interim Reporting | Meaning | Interim Financial Reporting - YouTube
Channel: WallStreetMojo
[12]
hello everyone hi welcome to the channel
of WallStreetmojo watch the video
[16]
till the end and if you're new to this
channel then you can subscribe us by
[21]
clicking the bell icon today we have a
topic that has interim reporting interim
[26]
reporting a sort of a reporting where
the reporting is done at the middle of
[30]
the year probably in q1 q2 q3 or q4 it
may be in any time span as you have this
[36]
has been mentioned in the extract away
of containership plc's the q3 2018 interim
[41]
reports so interim means you know
in-between of the annual reports what
[45]
sort of meetings that have been setting
up so let's understand this in a detail
[50]
format if you see an interim report is
basically you know financial statement
[54]
that has been reported by a firm for a
period which is you can see less than
[59]
a year and there used to convey the
financial performance of the company
[64]
semi-annually basis maybe on the
quarterly or even on the monthly basis
[69]
and all the regulator's they prescribe
an annual reporting of the data it helps
[74]
in establishing a better you can say
that an transparent communication with
[78]
investors by providing an updated
information between annual reporting
[82]
periods so they are normally what we
call as reviewed by the company's
[88]
internal auditors rather than going for
complete statutory audit which would be
[92]
impractical in impractical and highly
time-consuming I mean considering the
[96]
frequency with which the reports have
been published right let me now give you
[102]
an example of interim reporting uh how
exactly it works through the interview
[107]
reports are declared at various time
period we all know now and you know they
[113]
are providing the evidence of they
what we call as the firms of performance
[117]
right at different intervals during the
accounting period so let's see a
[121]
reporting example let's say a publicly
listed company come up with quarterly
[126]
financial numbers let's say they come up
with this and there is a real estate
[131]
firms that come up with the numbers on
project basis as and when their projects
[137]
are completed so an interim financial
report it it implicitly
[141]
provides any important analytical
information
[145]
Let me give you data of an IT company as you
move here you we will get the data we
[150]
have an IT company the financial
performance is the fiscal years we have
[156]
growth quarter lending details and
quarter ending or 2018 2017 detail so
[161]
even though the operating profit is
rising over the year on the year or year
[165]
basis there has been a drop indeed you
can see the quarterly numbers so this
[169]
suggests that you know q4 over here was
not good enough for the firm even though
[175]
there was a 12% as you can see
growth the increase in the profit on the
[182]
annual basis so the information
implicitly signifies you know the
[185]
seasonality of the IT business indeed
what we call as October to December
[189]
quarter and this should guide the
management in planning for the long-term
[193]
strategic initiatives okay now let me
take you what exactly are the objectives
[199]
behind going for internal reporting okay
see the investment decisions are taken
[204]
around the okay investors don't wait for
what we call as annual reports they
[209]
don't wait for this and that are
declared at the end of the fiscal year
[213]
now with companies relying not only on
the organic but also on the inorganic
[216]
roads the annual data is insufficient in
evaluating developments in earning
[221]
projections of the industry and the form
so in such a dynamic business
[225]
environment interim reports offer a
better periodic snapshot to the
[230]
shareholders and providing a current
information will always keep a firm in
[237]
the good books of the investors making a
location of capital investment easy
[241]
leading to a better market liquidity
which is actually the primary goal of
[246]
what we call as capital markets okay now
there are major objectives let me run
[251]
you through of this it is estimation
of the annual earnings that is based on
[257]
interim of financial second is make cash
flow projections third is identify the
[265]
turning points in the firms or financial
status fourth is you know you need to
[274]
evaluate the management performances and fifth one to formulate the internal
[282]
control procedures that's gonna be part
of this and finally the sixth one to
[289]
supplement the annual report that's
gonna be the next thing so this are some
[296]
of the objectives of interim reporting
let me run you through some of the
[300]
advantages of interim reporting first
interim reporting helps in
[304]
establishing of better you can say
connect with the investors internal
[309]
report is very useful or highly useful
for big conglomerates like you know
[314]
Warren Buffett's or Hathway you know
there are running multiple lines of
[318]
business helping them in tracking if
they're short of investment initiatives
[321]
are in line with the long-term strategy
third you know if there are any material
[327]
misstatement let that's what we call as
error frauds any financial statement it
[332]
can be deducted and prevented at a very
early stage you know compared to the
[336]
annual report it helps any
implementation of the comprehensive
[341]
internal control procedures so that is
one part of it which further makes
[348]
accounting policy is very robust
declaration of the interim dividend is
[353]
possible when the fin statement that is
the financial statement are reported for
[359]
small periodic is incentivizing you know
the shareholders to hold their
[363]
investments but there are some
challenges that that pushdowns this kind
[368]
of advantages they are you know all the
interim announcement they reduces the
[371]
interim reporting period it increases
the what we call as the impact of errors
[379]
okay
it increases the impact of the errors in
[383]
estimating or estimation of leading to
concern in reporting the accurate
[387]
information so there are various
operating expenses that I incurred in
[391]
one period and the benefit
are earned in the subsequent period like you
[396]
know advertising repairs maintenance
cost and such expenses it can distort
[401]
the financial details of the firm for an
interim period and although in the
[404]
longer term might be it's it's quite
helpful now the impact of for what we
[409]
call as the seasonality
and economic cycles what exactly happens
[416]
is that is always felt more in the
interim statement and are almost
[419]
nullified in the annual report so they
are they are also more prone to
[422]
management manipulations by presenting
strong quarterly growth in the early and
[427]
the ending order so this affects the
what we call as the consistency and
[433]
compatibility of the financial reports
third one you know inventory is the main
[439]
element of the revenue generation in any
business so periodic calculations you
[444]
can say that no it is it is off
inventory you know in interim period are
[450]
repetitive time consuming and the
error-prone but a termination of the
[454]
quantity of the inventory and its
valuation leads to unnecessary
[457]
adjustments in the interim financial
statements compared to an annual report
[460]
the absence of a reg fair regulatory
framework what exactly goes in over
[466]
there for disclosure practices in this
leads to confusion as to what extent
[470]
they should be provided so the
disclosure can defer from two companies
[474]
within the same sector which can be
misleading to the shareholders fifth you
[478]
know interim reports they create over
emphasize on what we call as the
[482]
short-term results sometimes presenting
a distorted picture which can be
[487]
detrimental for both the investors and
companies so on a concluding note
[493]
interim reporting is not much
different from the annual reporting in
[496]
terms of the content but only differs in
the what we call as timing of the
[501]
publication so in fact it is the subset
of the annual reporting that provides all
[505]
the major financial data like Revenue
income expenditures losses so for a
[509]
particular period of time it is not
mentary for a firm to publish it but
[513]
you're not doing so we can very beneficial
we can very beneficial for to the firm
[518]
for the investors and stakeholders
leading to a better and mature economic
[522]
ecosystem so that's it for this
particular topic if you have learned and
[527]
you know liked the video if you think
that you know if you have enjoyed and
[531]
learned watching this video please like
comment on this video and subscribe to
[535]
our channel for all the latest updates
thank you everyone
[538]
Cheers
Most Recent Videos:
You can go back to the homepage right here: Homepage