Updated on March 11, 2023
Annual report is an important document for companies and investors alike. It is the yearly record published at the end of the financial year by a listed company. It contains detailed information about the company’s yearly financial performance, business updates and related information. Annual Report can be downloaded from the company’s website, major financial sites or a physical copy can be requested from the company as well.
What are the contents of Annual Report?
Annual Reports can have different formats, but largely they contain the following information:
1. Management commentary
2. Previous Financial Year highlights
3. Corporate Information
4. Director’s Report
5. Shareholding pattern and changes
6. Financials and Disclosures
How to read an annual report?
There is no defined way to read a company’s Annual Report, but some sections hold vital information and are indicative of the company’s performance and future. These are :
a. Management Notes
b. Director’s message
c. Financial highlights and statements
d. Notes related to cash flow and finances
Why is an annual report important?
Company Annual Reports are crucial because:
a. These are audited documents and any incorrect information contained therein could be considered as mis-reperesatation of facts.
b. An annual Report gives a general sense of company’s business and overall environment to various stakeholders.
c. Annual Report is readily used by retail as well as Institutional Investors for business assessment, forecasting and future projection purposes
Limitations of Annual Report
Annual Reports have some limitations as well. Some of these are :
a. It contains historical data and thus cannot give accurate future projections or estimations
b. Annual Report is to be read along with other documents or statements like P & L statement, Balance Sheet for making conclusive assessment.