Analysis of financial annual report
Each year companies are required to produce financial annual reports. These reports can be large or small. It depends on the nature of the company, the business conducted and whether or not there are shareholders involved.
Publicly traded companies provide shareholders or stockholders with the financial annual report in a separate meeting. This gives these individuals an idea of where the company stands on a financial basis and where it is headed in the immediate future. The financial annual report provides insight into how successful a company may be at any given point during the fiscal year.
The report captures the various actions that take place within a company during a fiscal year. This may entail losses on projects, gains on other projects, stock market affects and any other financial disclosures the company deems to be relevant to its bottom line. Potential investors may also utilize a financial annual report to determine whether or not a company would be a sound financial investment.
Financial annual reports begin with an introduction section. One of the first financial disclosures made here are the financial highlights for the previous fiscal year. These highlights are broken down by company business segment. For example, an entertainment company may have segments of studio entertainment, theme parks and retail products. Figures are provided highlighting how each segment performed over the year.
Next in the introduction section is a letter to the board of directors, shareholders or stockholders. It is from the chairman or co-chairman of the board. The letter is short in nature and gives an overview of how financial dollars were spent in operations. Projections are made as to where the chairman sees the financial operations of the company going in the coming year.
The introduction section comes to a close with a brief financial review. Here any pertinent financial information is discussed such as why a company acquired a smaller sister company or recorded an unexpected loss on a project.
The second main component of a financial annual report is key business performance. This takes each of the smaller business segments and provides more detailed financial information on each. It is not just the financial successes that are disclosed. A company will provide information on a project that may have had an unexpected poor financial performance. As with other sections of the financial annual reports, projections are made for the coming year. At any time during that year, shareholders may inquire as to where the company stands on meeting financial goals disclosed in the most recent annual report.
A financial annual report comes to a close with the listings of the members who sit on the board of directors. Additional listings are made detailing the corporate officers for the various business segments that a company maintains.
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