Understanding Annual report

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Offline Shekh Moniruzzaman

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Understanding Annual report
« on: April 09, 2018, 11:17:34 AM »
An annual report is a comprehensive annual publication that a public limited company must provide to shareholders to describe their operations and financial conditions throughout the preceding year. Annual reports are intended to give shareholders and other interested people, information about the company’s activities and financial performance. The front part of the report often contains an impressive combination of graphics, photos and an accompanying narrative, all of which chronicle the company’s activities over the past years. The back part of the report contains detailed financial and operational information.

In the case of mutual funds, an annual report is a required document that is made available to fund shareholders on a fiscal year basis. It discloses certain aspects of a fund’s operations and financial condition. In contrast to corporate annual reports, mutual fund annual reports are best described as “plain vanilla” in terms of their presentation.

Typically annual reports will include:

•   Chairman’s Report
•   CEO’S Report
•   Letter to the Shareholders
•   Narrative Text, Graphics and Photos, Listing of the company’s directors and executive officers
•   Summary of Financial Data
•   Corporate Information
•   Auditors report on corporate governance
•   Mission statement
•   Corporate governance statement of compliance
•   Statement of directors’ responsibilities
•   Invitation to the company’s AGM

As well as financial statements including:

•   Auditors report on the financial statements
•   Statement of Financial Position or Balance Sheet
•   Statement of Retained earnings
•   Comprehensive Income Statement or Income Statement
•   Cash Flow Statement
•   Notes to the Financial Statements
•   Accounting Policies

Other information deemed relevant to stakeholders may be included such as a report on operations for manufacturing firms or corporate social responsibility for companies with environmentally- or socially-sensitive operations. In the case of larger companies, it is usually a sleek, colorful, high gloss publication.

The details provided in the report are of use to investors to understand the company’s financial position and future direction. The financial statements are usually compiled in compliance with IFRS and/or the domestic GAAP, as well as domestic legislation (e.g the Company Act-1994 in the Bangladesh).