Question

What is Annual Report and what type of information does it present?

Answer 1

• Annual reports are formal financial statements that are published yearly and sent to company stockholders and various other interested parties. The reports assess the year's operations and discuss the companies' view of the upcoming year and the companies' place and prospects. Both for-profit and not-for-profit organizations produce annual reports.

• An annual report is a financial summary of a company’s activities during the year along with management’s analysis of the company’s current financial position and future plans.

• Annual reports are prepared at the end of the fiscal year for external users to gain financial information about the inner workings of the company and what management plans to do in the future.
• The full report gives external users a much more holistic view of a company’s financial position, market standings, and ability to improve than a simple set of comparative financial statements.
• Although the report is directed at external users, it’s often used as an advertising and marketing tool to show the public that the company is doing well.
• This report is typically issued with graphics, photos, illustrations, graphs, and diagrams. It’s for more attractive than a simple set of financial statements.
• This is the report where management can brag about its accomplishments and entice new investors to join the company.

Annual Report includes

1. General description of the industry or industries in which the company is involved.
2. Audited statements of income, financial position, cash flow, and notes to the statements providing details for various line items.
3. A management's discussion and analysis (MD&A) of the business's financial condition and the results that the company has posted over the previous two years.
4. A brief description of the company's business in the most recent year.
5. Information related to the company's various business segments.
6. Listing of the company's directors and executive officers, as well as their principal occupations, and, if a director, the principal business of the company that employs him or her.
7. Market price of the company's stock and dividends paid.

Some companies provide only this minimum amount of information. Annual reports of this type usually are only a few pages in length and produced in an inexpensive fashion. The final product often closely resembles a photocopied document. For these companies, the primary purpose of an annual report is simply to meet legal requirements.