Qualitative Characteristics of Financial Information

The objective of financial reports is to present financial statements data about changes in the financial situation, financial performance, and the financial situation of the company. They can be used to provide information for decision-making, including financial, investment, and credit decisions that are beneficial to a range of customers. There are seven major categories of users that include public and private lenders, investors employees, customers, supplies as well as other government agencies and the information requirements are different for every group. For instance, employees are interested in profits, retirement benefits, the possibility of employment, and so on. Financial statements are supposed to be accurate, reliable, understandable, and comparable. Additionally, financial statements could contain other data such as the risks and uncertainties that affect the company.

Evaluation of the relevancy to the information, reliability, comparability, and comprehension

Relevance refers to the information that is able to influence the economic decision-making of users. There are two major aspects in relation to relevance, which include predictive value and confirmation value. Predictive value is a way for users to measure their past future, present, or future performance. It can also help users verify their previous assessments. Annual reports also include 10-year data, which includes the most recent figures for the ten years. It also includes the profits and losses account for the balance sheet, passenger service figures, and more. It will help shareholders verify the previous assessments, evaluate the previous performance, and then compare the relevant information.

The annual reports are the operating network that will be extended in the future. In this report it is stated the properties they are currently developing, constructing, or planning to build, and also the properties owned as well as controlled by the company. This report can assist us to forecast the future and present performance of the property and confirm previous assessments.

In the annual report, there is a CEO’s report on operations and outlook. This is MTR’s CEO speaking about the MTR’s previous performance, which is positive and bad. It also outlines the future development for the MTR. It helps us make up our minds regarding the MTR and what it plans to do in the coming year. It also gives a brief look back at the performance of the previous year.

Reliability concerns information that is a full and accurate representation. Five major concerns concern reliability, including being free from material errors and a true representation impartial, prudent, and comprehensive. MTR employs one of the biggest 4 accounting companies, KPMG. KPMG is a major international business with many years of experience in auditing and highly trained employees. Thus, shareholders can have confidence regarding its financial statement. However, the audit report says that KPMG provides a fair and fair assessment, which implies that the MTR reports are prepared in accordance in accordance with accounting standards, which implies that the reports are free of material errors, accurate representation, prudential and full. Furthermore, the accounting company is an independent auditing firm that is able to meet the criteria of neutral. As shareholders, we have high confidence in the report, as it has exact and doesn’t have any inventive account.

MTR is considered to be a publicly-owned company and is run by the government. It is required to maintain to be transparency and openness about all information to the public, including the company’s policies. Therefore, their information has to be accurate as well as neutral, sensible, and accurate, which is legally required. Thus, their information is of the highest trustworthiness. From the perspective of the shareholders, we are able to count on the information.

The MTR has an internal audit team that is accountable for internal control, review of projects and fraud investigation due to diligence and management reviews, and so on. This team can assist the MTR to provide us with reports that are solid, free of errors of a material nature, honest neutral, and cautious. As shareholders, we can have complete confidence in the annual reports.

Comparability refers to the ways in which similarities and distinctions can be spotted and assessed. Two key aspects to consider when evaluating comparability. They are transparent and consistent. Within the annual reports, there are many numbers that allow us the opportunity to evaluate. Like The Ten-Year Statistics, it includes the data from ten years to help us realize. We can observe that the earnings per share increase every year, increasing starting at $0.81 per share back in 2000, to $1.69 per share in 2009. Additionally, the profit increased rapidly from $7,758 in 2006 to $15,182 in 2007.

Additionally, the CEO’s Review of Operations and Outlook section, analyzes various data such as the average weekday usage in 2009 for Domestic Service in 2009 was 3.5 million. Domestic Service in 2009 was 3.5 million, which is an improvement of 0.9 percent over 2008 and the total income from property rental as well as property management business in 2009 was HK$2,928million which is an improvement of 8.0 percent over 2008.

Furthermore, the financial statements include two-year figures to be compared, one of those is the 2008 and 2009. In particular, loan other obligations, as well as bank overdrafts are down dramatically between $31,289 and $23,868 in 2009. This decreases 23.7 percent. Dividend per share increased by 0.48 from 2008 and 0.52 in 2009, which is an increase of 8.3 percent. Based on the data we’ve analyzed below, you can observe that the MTR profits are increasing every year, and the loan amount decreases each year so it’s an indication for us to keep the share or invest greater.

Understandability refers to the extent to which the significance of the information is seen. Two important aspects include comprehension, the ability of users, and the ability to aggregate and classify. In the annual reports, there is a glossary section. The glossary describes a specific field of knowledge that is specialized and specialized, or that is new to the market. For instance, operating margin is the term used to describe operating profit from railways and related companies before amortization and depreciation as an amount of turnover. Ordinary shares are ordinary shares that cost HK$1.00 per share in the capitalization of the business and others such. As an investor, it can help greatly when reading annual reports because there are not many shareholders with the same level of professional expertise.

The annual report includes a variety of images, charts, and tables. The annual report is extremely heavy since it contains huge details about MTR performance. From the perspective of shareholders when the report is full of text they are difficult to understand the entire document, as there are a lot of words to comprehend and read. While reading these annual accounts, it’s easy to locate pictures charts, tables, and tables, they can assist us better understanding the details, and in particular the charts and tables. they convert the data into a readable format to help readers grasp the essence of the report quickly.

It also has an information page that categorizes similar data into similar groups. When we examine the content pages, it doesn’t only lists the title, but also states the page number which provides shareholders more able to locate the information they require.

The annual reports are available in different versions of the report in different languages that can accommodate diverse users. Even though MTR is a Hong Kong organization, as a shareholder, I could be a non-native and cannot comprehend any Chinese words. Thus, a different language version is also important. It is evident in the MTR annual reports were made by two different versions, which comprise Chinese in addition to English.

Which of the four characteristics of financial data is the most significant?

My opinion is that reliability is the main quality attribute.

When the statements aren’t trustworthy, shareholders won’t have any faith in the MTR reports because they believe that the information on the financial statements of the MTR is not reliable and accurate. Thus, they won’t want to read what they see in the MTR reports, which means that the goal of financial statements is not met. Although the annual report has a higher level of relevancy as well as comparability and understanding, however, they are not reliable enough to result in investors and shareholders fleeing away.

On the other hand, If the financial reports are more reliable, reliable, shareholders can be more confident in the annual report, since the higher level of confidence indicates that the annual report must meet the criteria of being free of material errors and a true representation, completely, impartial and prudent. If the financial statements meet these standards, they will make shareholders and draw more investors.

In reviewing reports from the MTR Annual reports it is clear that the reports are of excellent quality and reliability. The MTR uses an external accounting company that is KPMG to examine their accounting records which are in line with the notion of neutral. The audit company also provides an honest and accurate view of the MTR which means their data are reliable, accurate as well as free of errors that could be considered material.

Based on the discussion above it is clear that reliability is among the most significant qualitative characteristic of the financial statement.


In analyzing the MTR annual report, I have realized that the four characteristics of a qualitative report can have a significant impact on shareholders. They have a major influence on how they make decisions and can assist shareholders to understand, comprehend and improve their faith in their trust in the MTR reports. The four characteristics of qualitative are also a factor in whether shareholders decide to invest or do not. My opinion is that reliability is the most crucial qualitative attribute since it indicates truthfulness and honesty. Shareholders will be relying on it to determine if the accounting data is reliable or not, thus making an investment decision.

Translate »
Need Help? Chat with us