Differences in Presenting Annual Performance
The two reports use similar way of presenting heavy information on financial performance, especially the financial ratios with minor differences in reporting format. When reporting the financial performance for the year 2015, the reports of Stryker Corp and Abbott rely heavily on comprehensive financial ratio tables and graphs in the analysis of each performance indicator against the projections (Stryker Corporation, 2016; Abbott, 2016). Besides, there are pie charts that are uniformly spread in the part of describing the basic financial ratios such as profitability, liquidity, and internal rate of return among others (Grace, 2011). The tables are in the form of income statements. At the end of presentation of heavy information in both Stryker Corp and Abbott reports, there are prose summaries in the financial reporting consisting of 20 and 22 elements that summarize the whole analysis, respectively.
Various ratios are used to analyze profitability such as, gross profit margin, operating profit margin, net profit margin, the return on assets (ROA) ratio, and the return on equity (ROE) ratio in the two reports. As mentioned earlier, the financial reports are prepared in accordance with IFRS (Grace, 2011). As stated in the financial reports, the Stryker Corp and Abbott make estimates and assumptions that affect the reported amounts of assets and liabilities (Stryker Corporation, 2016; Abbott, 2016). The most critical accounting policies and significant areas of judgment used by the two companies in their reports are as follows. The main accounting policy used in the reports is the revenue recognition. The two companies recognize the invoiced amount as revenue. This value excludes the sales made between the two companies and value added tax. It also excludes estimates accruals for chargeback and refund. The two reports use a similar policy to offer a credit note for all returns and destroy all returned stock in the market (Stryker Corporation, 2016; Abbott, 2016). Further, revenue is recognized at the point of delivery.
The second policy used in the two reports is on research and development (R&D). The R&D on activities to produce commodities is expensed in the year it was incurred. Besides, purchase of intellectual property to supplement the R&D is capitalized as an intangible asset in the two reports (Stryker Corporation, 2016; Abbott, 2016). Third is the policy on litigation. Contingent liabilities may arise from day to day operations of the business. The two companies have a similar policy to disclose and not provide for litigations that have less than 50% probability of crystallizing or where they are unable to make reasonable estimates of the liability. Where a loss has more than 50% probability of occurrence and the amount can be estimated, the loss is absorbed or provided for. However, Stryker Corp report appears to be more complex in reporting this policy (Stryker Corporation, 2016). It covers almost a whole page in the report.
The two reports share similar policy on taxation reporting. Since Stryker Corp and Abbott are global companies, they are governed by a number of tax policies in various jurisdictions as captured in the two reports. The two companies share the same policy on tax benefits. These benefits are only recorded in the books of account if the likelihood of the tax positions can be sustained. The final policy is on segment reporting. Since Abbott is involved in a single business activity, it does not have multiple operating segments as is the case with Stryker Corp.
Goals, Challenges, and Plans
In the Stryker Corp report, the goals emphasized are the expansion of the current revenues and promoting diversity in production (Stryker Corporation, 2016). In the Abbott report, a lot of emphasis is placed on recapturing the market leader position through strategic alliance. The challenges captured in the two reports are similar and include market swings, competition, increasing cost of doing business, and the need to sustain the current production matrix. The Abbott report indicates that the company intends to penetrate the international markets in the two to five years through intensified capital injection and partnerships (Abbott, 2016). Besides, the company has plans of streamlining its production matrix. On the other hand, the Stryker Corp report indicates that the company has plans of increasing the current product line to capture stratified market and create a new niche beyond the traditional segment.
Information Presentation
In the Abbott report, the visuals in the background are pictures depicting different aspects of nutrition and healthy living in warm colors, with green color dominating the presentations. The use of pictures to depict different products in the report is very attractive and a reader would be drawn to the coloration theme immediately the report is opened. In the Stryker Corp report, the visuals used in the report depict a transportation environment consisting of picture of aircrafts, passengers, and ideal comfort. These visuals are presented in warm colors with the sky blue hue dominating. A reader of the report would be immediately attracted by the balancing of colors and brief colorful wordings in the background.
The CEO’s letter in the Abbott report is more comprehensive and longer than the CEO’s letter in the Stryker Corp report. For instance, the key performance indicators are properly organized in the Abbott’s CEO letter in terms of the actions to be taken and future focus. The sentence structure in the CEO’s letter in the Stryker Corp report is well balanced with the first section discussing focused performance followed by actual performance results and expectations in the next financial year (Stryker Corporation, 2016). On the other hand, the CEO’s letter in the Abbott financial statement does not dwell much on the performance of the company. Rather, it dwells on stakeholder expectations and the need for organizational efficiency.
In the Stryker Corp report, the writing is based on simple language with an explanation of technical terms in the appendix. For instance, each paragraph consists of uncomplicated sentence structures written in simple English language. In the Abbott report, the writings are a little bit complex since there are several medical terms that a reader has to encounter. However, the report is presented in simple English language besides very short sentence structures that easily explain the concepts (Abbott, 2016).
In the Abbott report, the part of reporting financial losses is justified by heavy investment in the expansion of the company in the year 2014 (Abbott, 2016). In the Stryker Corp report, the part of competitors interfering with the market is given a positive spin through the presentation of a strategy for competitive advantage through product differentiation and further market expansion (Stryker Corporation, 2016). The Stryker Corp report is easier to understand than the Abbott report since it uses the simple language and reporting format unlike the complex reporting format in the Abbott report. The Abbott report is more interesting since there is a clever balance between content and visual presentation. In my opinion, the Abbott report is more convincing since the presentation balances the aspects of content and visualization.
References
Abbott. (2016). 2015 annual report. Web.
Grace, J. (2011). Working knowledge: Composition and the teaching of professional writing. New York, NY: ProQuest.
Stryker Corporation. (2016). 2015 annual report. Web.