Question

The management and discussion and analysis (MD&A) section of the annual report provides valuable information on an entity's revenue and expenses. The information contained therein, helps deriving various ratio analyses.

What information do you find in the MD & A that is important in assessing the earnings and earnings potential of a selected company and why?

Answer 1

Management discussion and analysis (MD&A) is the portion annual report in which management addresses the company’s performance over the previous twelve months.

In this section, the company’s high-ranking officers analyze the company’s performance using qualitative and quantitative performance measures.

In the MD&A section, management will also provide commentary on financial statements, systems and controls, compliance with laws and regulations, and actions it has planned or has taken to address any challenges the company is facing.

Management also discusses the upcoming year by outlining future goals and approaches to new projects. The Management Discussion and Analysis is an important source of information for analysts and investors who want to review the company’s financial fundamentals and management performance.

ANALYSIS REFERENCE - COGNIZANT TECHNOLOGIES ANNUAL REPORT 2017

Section of MD&A report

• Executive summary
• Business segments
• Results of operation for the year
• Non GAAP financial matters
• liquidity and capital resources
• Commitment and contingencies
• Off balance sheet arrangements
• Critical accounting estimates
• Forward looking statements

information assessing the earnings and earnings potential in MD&A Report

1)Financial Results ( Summary) of current year and previous year- it helps to analyze growth of revenue and income of the company

2)Contribution/ distribution of income from each segment:- provides which segment of operation is major part of revenue.

3)tax reforms and its effects on company. helps analysis future revenue due tax laws of various countries

4)operational results of past three years and growth impact analysis

5)revenues by segments of past 3 years

6)liquidity and capital resources segments provides cash flow information of (operation, investment, and financing ) activities of past years and it helps conclude liquidity position of company and ability to generate income / revenues of the company

7)obligations and commitments to make future payments under contractual obligations and commercial commitments