What is an Annual Report?
An annual report is a formal financial statement issued yearly by a corporate. The annual report shows assets, liabilities, revenues, expenses and earnings - how the company stood at the close of the business year, how it fared profit-wise during the year, as well as other information of interest to shareholders. Companies publish annual reports and send abridged versions to shareholders free of cost. A detailed annual report is sent on request. Remember an annual report of a company is the best source of information about the financial health of a company.
Which features of an Annual Report should one read carefully?
One must read an Annual Report with emphasis on the following:
- Director’s Report and Chairman’s statement, which are related to the current and future operational performance of a company.
- Auditors’ Report (including Annexure to the Auditors Report)
- Profit and Loss Account.
- Balance Sheet.
- Notes to accounts attached to the Balance Sheet.
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