Public firms are required to provide an annual report to shareholders that details their business activities and financial standing. The report’s front section frequently includes an amazing collection of illustrations, images, and a narrative that describes the company’s operations over the previous year and occasionally includes projections for the future (Hayes, 2022). The report’s extensive operational and financial information is in the back (Hayes, 2022). An annual report details a company’s operations from the previous year. It is a resource via which the company’s interested parties, such as shareholders, workers, clients, and directors, quickly learn about the firm and its operations. It is typically created for a 12-month period, which corresponds to the business’s fiscal year.
The annual report contains the following financial reports:
- Income Statement (a)
- Balance Sheet (b)
- A cash flow statement
- Financial statement notes
- Report from the auditor
- Chairman/CEO Report
The following are the main categories of information found in each of these reports:
- The income statement includes information on profit and loss.
- Gross profit is determined by adding the cost of products sold to the total income.
- Operating costs and gross profit are used to compute net profit.
- Income Statement:
- Asset information.
- Information on Liabilities
- Information on shareholder equity.
- Cash Flow Statement:
- All outgoing and incoming cash movements.
- Financial Statement Notes:
- Financial statement facts and data.
The U.S. Securities and Exchange Commission mandates the yearly filing of Form 10-K, which contains a full and thorough description of a company’s financial performance (Form 10-K, n.d.). Form 10-K and the annual report to shareholders are two separate documents. Form 10-K contains information such as the company’s history, equity, organizational structure, subsidies, and an audited financial statement, along with other information. In contrast, an annual report primarily contains the company’s financial statements.
References
Form 10-K. (n.d.). Investor.gov. Web.
Hayes, A. (2022). Annual report explained: How to read and write them. Investopedia. Web.