How to communicate an Annual Stock Report

What is the annual report? The annual report is a document prepared by a company’s management to the shareholders explaining what happened in the business for the year. There are no real rules for what an annual report contains. Some companies don’t even prepare one.

Vocabulary Balance sheet: A statement of the assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period. Annual report: An annual report is a comprehensive report on a company's activities throughout the preceding year. Footnotes: An additional piece of information printed at the bottom of a page. Financial statements: Usually financial statements refer to the balance sheet, income statement, statement of cash flows, statement of retained earnings, and statement of stockholders' equity. Subsidiaries: A company controlled by a holding company.

Content of an Annual Report -Financial Highlights -Letter to the Shareholders -Narrative Text, Graphics and Photos -Management's Discussion and Analysis -Financial Statements -Notes to Financial Statements -Auditor's Report -Summary Financial Data -Corporate Information

The final format of the annual report depends on the needs of a company, its industry, and any legal disclosure requirements. Regardless, an annual report contains a selection of the following nine parts: Letter from the chairman: The letter from the chairman of the board is the traditional place for a company's top management team to tell you what a great job it did during the preceding year and to lay out the company's goals and strategies for the future Sales and marketing: This section contains complete information about a company's products and services, as well as descriptions of its major divisions and groups and what they do.  Ten-year summary of financial results: Assuming that a company is at least ten years old, many annual reports contain a presentation of financial results over that period of time. 

Management discussion and analysis: This is the place where a company's management has the opportunity to present a candid discussion of significant financial trends within the company over the past couple years. Letter of CPA opinion: To be considered reliable, a company's financial statements have to be reviewed and audited for accuracy by a qualified Certified Public Accountant (CPA). In this letter, a CPA firm states any qualifications that it has with the financial statements. Financial statements: Financial statements are the bread and butter of the annual report. This is where a company presents its financial performance data for all to see. At minimum, expect to see an income statement, a balance sheet, and a cash flow statement. Be sure to watch for footnotes to the financial statements and read them carefully.

Subsidiaries, brands, and addresses: Here you find listings of company locations — domestic and foreign — and contact information, as well as brand names and product lines. List of directors and officers: Corporations typically have boards of directors — senior businesspeople from both inside and outside the organization — to help guide them and provide a broader view of markets and business environments than that seen by internal managers. Stock price history: This section gives a brief history of stock prices and dividends, showing upward and downward trends over time.

Conversation 1) What did you understand in this topic? 2) What is an annual report according to you? 3) Is annual report important? Why?

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