8 Things You Must Not Miss In An Annual Report
The annual report (AR) is a yearly publication by the company and is sent to the shareholders and other interested parties. The annual report is published by the end of the Financial Year, and all the data made available in the annual report is dated to 31st March. The AR is usually available on the company’s website (in the investor’s section) as a PDF document, or one can contact the company to get a hard copy of the same.
8 Things You Must Not Miss In An Annual Report
The annual report (AR) is a yearly publication by the company and is sent to the shareholders and other interested parties. The annual report is published by the end of the Financial Year, and all the data made available in the annual report is dated to 31st March. The AR is usually available on the company’s website (in the investor’s section) as a PDF document, or one can contact the company to get a hard copy of the same.
Since the company’s annual report, whatever is mentioned in the AR is assumed to be official. Hence, any misrepresentation of facts in the annual report can be held against the company. To give you a perspective, AR contains the auditor’s certificates (signed, dated, and sealed) certifying the sanctity of the financial data included in the annual report.
1. An annual report is a comprehensive eport on a company's activities throughout the preceding year
It gives people information about the company's activities and financial performance. Here are 8 things you must read closely!
2. Directors Report
This is the first relevant segment of the annual report where the board of directors puts out the key business themes for the year, an analysis of th financial performance and key return parameters
3. Management discussion and analysis (MDA)
This segment focuses less on financials and more on the business environment, the strategies of the company, the emerging structure of competition, the game plan of the company in the coming years, the implications etc
4. Vision and mission statement of the company
Nothing gives you a better understand about the quality of the management than the vision and mission statement of the company! '`)
5. Income statement and Balance sheet
It shows you how profitable the business is and how much return on assets the company is generating. Don't -new just read the raw numbers on the financial but also read the notes to the accounts
6. Cash flows statement
A company may have generated fantastic profits but, is that really generating profits for the business? That is what cash flow statement is all about. It is divided into 3 sub-segments viz. Cash flow from Operations, cash flow from investing and cash FLOW FANCING.
7. Contingent liabilities and auditor qualifications
These are not liabilities but have the potential to become liabilities subject to certain conditions!
8. Report on corporate governance
This section will give you insight about the alignment of the management actions with the shareholder interests and as well as the ethics followed b the company
9. Information on shares of the company
This will show you the ownership shifts trend. You can gauge if the promoter stake is gradually reducing or if major institutions are selling out!
