Objective of Financial Statements- a Critical Review

The management of all listed companies registered in UK are bound by law to prepare and provide financial statements for each accounting period. This has been the case since the conception of ‘The Companies Act 1948' (Flint, 1982), last amended in 1985. Although it's been over 55 years of reporting entities preparing financial statements, the objective of these statements has always been a matter of discussion. The Accounting Standards Board (ASB) came up with a precise outline in 1999 which stated "The objective of financial statements is to provide information about the reporting entity's financial performance and financial position that is useful to a wide range of users for assessing the stewardship of the entity's management and for making economic decisions" (Accounting Standards Board, 1999). Astrazeneca International is one of the companies which prepare financial statements in compliance with ‘The Companies Act 1985'.This essay is an attempt to critically evaluate the financial information provided by Astrazenca to find out if it meets the objectives set by the above statement. In order to achieve that, it's imperative to first understand the meaning of the highlighted components of the statement and have an overview of the company under discussion.

Astrazeneca: An overview

Astrazeneca is a leading pharmaceutical company formed in 1999 through merger of Astra AB of Sweden and Zeneca group PLC of UK (www.astrazeneca.com). The world pharmaceuticals market was valued at $492 billion in 2004 (Astrazeneca annual report, 2004). Moreover with Astrazeneca pumping in almost $3.8 billion into research and development for new drugs in 2004 at the rate of $15 million per working day makes it an interesting and an ideal entity to analyse (Astrazeneca annual report, 2004).

In addition to the above facts, Astrazeneca being a pioneer in its field will definitely be an ideal entity to study and analyze. Companies in the big league are expected to adhere to the...