Many companies focus on the quality of their IR website and overlook the importance of providing high quality practices when reporting their financial information. The financial disclosure ranking evaluated by IR Global Ranking is aimed at identifying and rating how companies disclose their financial information in terms of what is being disclosed and how the information is generally made available to the public.
The analysis conducted by IR Global Rankings is based on the quality of the information provided on each participant’s latest financial material, mainly quarterly financials, earnings releases and interim reports, within the categories below:
Non-Financial Operating Information
Providing non-financial operating information is very important as they can be a useful complementary tool for investors. IR Global Rankings verifies that the information provided is easy to find and includes information such as market shares, volumes and prices.
A comprehensive income statement should be provided and explanations for the results should be as clear and detailed as possible. In addition, companies that proactively provide more information such as the composition of costs, revenue breakdown and operating margins by business segment receive bonus points. This kind of breakdown is appreciated by many investors as it makes it easier for them to understand the weight of each segment within the company’s operations and how future trends can affect results.
Balance Sheet & Related Items
A comprehensive balance sheet should be provided as it is an important tool that shows the financial health of a company. Notes to the accounts must also be included for full recognition within the criteria adopted by IR Global Rankings. Additionally details such as net debt, with terms and maturities, and detailed working capital explanations also count as bonus points.
For the purpose of the ranking scores, companies should provide a cash flow statement as detailed as possible. Although there are companies that do not provide this, we highly recommend this statement as it helps illustrate greater transparency.
Most companies provide financial guidance one way or the other, so it is preferable if it is formalized and updated in its financials releases. Specific guidance for figures such as revenue, margins and net income are highly appreciated but guidance for costs, industry outlook and medium-term corporate strategies are also considered for the purpose of the ranking.
Conference Calls & Presentations
For this category, IR Global Ranking evaluates if there is an actual earnings call and how long after the earnings release date it occurred. In addition, users should also be able to download the earnings presentation.
Publicly traded companies should also respect the principle of “Exemplary Disclosure”, which is the proper disclosure of financial information to all markets. IR Global Rankings evaluates that all filings are released simultaneously in terms of announcement (wires vs. IR website) and eventual gaps between disclosures in local language and English. In addition, accounting principals are also taken into consideration.