Why Annual Reports Are Required Reading for Smart Investors

Daniel Penzing
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What is the purpose of an annual report?

Investors have a lot of reasons to read annual reports. On the surface, this type of report seems like an important, but dull, formality. The words can be dry and the tables and graphs can look uninspiring. As such, annual reports have a reputation of being boring and unimportant. What’s more, it’s easy to fall into the trap of believing that reading annual reports is a task that’s only necessary for novice or lazy investors.

However, an annual report may actually be more interesting than you think. A company’s annual report has important information for all investors, not just novices or investors with a casual interest in the business. Private investors are not required to read the annual report, but even so, these reports are worthwhile for them to read. Knowing why they’re important and what information is included can help private investors not only invest more wisely, but also help them make more money.

What you will find in an annual report?

Unlike, the regulator, the annual report is an investor-friendly publication.

All publicly listed companies are required to publish an annual report that details their performance, financial statements, investment activities, etc.

The report also includes a section called the Chairman’s Statement that gives management a chance to express its views of the economy and its performance in the previous year.

It can also be viewed as a media statement to describe the company’s successes, challenges, achievements, and plans for the future.

A majority of the reports will focus on financial performance.

For example, if you are a beginner, you may be interested in some of the reports for the information about business growth, returns, and rating.

Here are the highlights from some of the major reports that were released in recent years.

Success: The good news is that overall, most companies are continuing to report profits but the number of zero profits companies has increased, in particular, among retail and technology companies.

Financial statements are the most important annual reports.

To understand a company’s past, present and future, you must read its statements.

Annual reports give you valuable information about a company. One of the most important parts of an annual report is the financial statements. This is where you find out a company’s past, present and future financial performance.

A company’s financial statements can be used to understand whether a company is under- or overvalued. So doing your own financial analysis of a company is essential if you’re planning to become an investor.

You can access a company’s annual report online. If you’re reading a hard copy of the annual report, make sure you use a magnifying glass to read the details. Many annual reports do not include all the information investors are looking for. To find all the information an investor needs, you have to access the company’s website.