Annual Report

Defining annual report

An annual report can be delineated as an annual publication which must be provided to shareholders by public corporations to explain their operations and financial conditions. The obverse part of the report includes an exciting combination of graphics, photos, as well as an accompany narrative, each of which records the activities of the company in the previous year. The flipside part of the report includes detailed financial and operational info.

However, in case of mutual funds, an annual report is an essential document which is provided to fund shareholders on the basis of a fiscal year. It reveals certain aspects of the operations and financial condition of a fund. As contrasted with corporate annual reports, mutual fund annual reports can b e best expressed as “plain vanilla” in terms of their presentation.

Users of an annual report

An annual report is useful as it contains important financial info. The main users of an annual report include:

• Employees

If the company is a public entity, whether or not the employees are stakeholders in their company, the annual report is a key source of information for them. Employees based in a single location can obtain a general idea about what is going on in the company.

• Investors

Investors generally look at the financial info enclosed in an annual report. The income statement includes details about sales and profit margins accomplished on those sales. The balance sheet includes a detailed statement about the current assets of a company, also including cash, stock and patents in addition to debts to be paid off by the company.

• Customers and suppliers

The customers and suppliers can determine the health of the company being dealt with, or thinking to do so, through info constituted in an annual; report. Customers may desire to deal with companies which are able to show the capability to accomplish projects. Suppliers are able to obtain info and statements related to contracts and prospective sales to estimate the credit terms extended to the company.

•  Community

The local community around the place where a company is considering doing the business can use the annual report to ascertain the company’s nature. Also, the environmental recommendations of the company are imperative for a community where the company is planning to build and operate plants.