cement board siding mundelein hardie plank siding siding replacement chicago soffit installation best siding northbrook .. Chicago Drug testing

How to Read an Annual Report

Every publicly traded company is required by the SEC(Securities and Exchange Commission) to provide annual reports to it's shareholders, and the general public as well. These annual reports contain very important financial information, as well of summaries of the companies progress made by the CEO, board members, etc. I use annual reports to decide whether or not im going to buy stock in that company.

How to obtain an annual report - There are basically two ways to get an annual report from a company. The first way is to call the Investor Relations department of a company and asked to have an annual report be sent to you. They send the annual reports free of charge to you, and it would usually arrive in 4 to 5 business days. These annual reports look like magazines, and are very professionally prepared. Usually if you go to the website of the company you're researching, they will have a "Investor Relations" link, and then you can fill out an online form with your name and address to recieve an annual report.

The second way to get annual reports from a company is to go to The SEC's Website at http://www.sec.gov. If you click on "Search for Company Fillings" located under "Filling and Forms", you'll be taken to a webpage called "Search the EDGAR Database". On that webpage, click on "Companies & Other Filers". Then enter the name of the company you need an annual report form, and then click "Find Companies". Look for a report labeled "10-K". That will be their the companies annual reports. Now the reports on the SEC's website are in no way glamourus! They are just in basic text format, and can be very boring to read. But, they provide the same important information from the company.

Inside of the annual report, you will find many things that are useful in helping you decide whether or not to invest in that company. Here's what you'll find in just about every annual report:

Corporate Profile - This is just a small summary of the basic operations of the company, what the company does, etc.

Letter from the President - This is a letter written by the president or CEO of the company, and most of the time the letters talk about the financial successes of the year. This letter may also mention major contracts or partnerships the company has formed, and give a general analyzation of the companies revenues and sales. Be careful when reading the letter from the President, because the business could be running to the ground, but while reading the letter you may get the immpression that all is well!

Independent Auditors' Report - Before a company can distribute their annual report to the public, the financial information inside of the annual report must be checked for accuary so shareholders are not misled. That's the job of the independent auditor. They auditing firm will search for evidence that supports the financial information in the Income Statement, Balance Sheet, etc., and then will write a letter if all is well.

Income Statement - The income statement in the annual report shows the net income or net loss for that particular year. It also shows net sales, cost of goods sold, and the expenses of a company. Income statements from different years can be compared to see if the company is improving financially. I like to compare income statements from the past 5 years, to see if the net sales and net income of a company is increasing.

Balance Sheet - The balance sheet shows the business' assets, and liabilities. The assets are listed in order of liquidity. The quicker an asset can be converted to cash, the more liquid it is. That is why Cash is at the top of the list of assets, because it is the most liquid asset. Under assets you may see items such as Accounts Recieveable (the amount of money that's owed to the company), Property and Equipment, and Other Invesments. In the list of Liabilities, you'll see items such as Accounts Payable (The amount the company owes to other businesses), Income Taxes Payable, and Long-term Debt.

Cash Flow Statement - The cash flow statement shows how the money the business makes, is moving in the business. The cash flow statement also shows if the business was able to increase their cash on hand during the year or not.

Risks - Usually in the back of the annual report, you'll find the risk that are associated with the business. Reading all the types of things that can affect the business is depressing, especially if you own stock in that company. But, to get a good idea of what can affect a business, reading the risks section of the annual report is the best way to go.

Michael Press is an investor and teenage entrepreneur. He currently owns and operates PassiveIncomeInfo.com, a free website with articles about how to build wealth. He also writes for and distributes the Creating Wealth E-zine.

In The News:

Its Snowing

The Winter Games for the Olympics are coming up soon... Read More

Mutual Fund Commissions

You have heard about a particular mutual fund from a... Read More

Different Ways of Buying Stocks

Let's say you are interested in this one company. You... Read More


Intervention. Now don't let that big word scare you. The... Read More

Invest, Be Wrong, and Make Money in the Stock Market

I have been trading for several decades and was an... Read More

Picking Mutual Funds to Outperform the Market

With over 6,000 mutual funds available, it may be tempting... Read More

Stock Valuation using the SMP Model

Disclaimer: Please note that I do not necessarily purchase, own,... Read More

Protect Your 401K

Checked your 401K lately? Going back to about a year... Read More

The Secret Art of Backtesting

If you have not back tested your trading system, you... Read More

Buy Low - Sell High

Now where have I heard that before? I know. It... Read More

Historical Briefing: Stocks, Finance and Money

The World Bank claims that some two billion of the... Read More


During the month of January the Dow Jones Industrial Average,... Read More

Shorting Stocks ? The Basics, Part II of II

After the publication of the first part of this two... Read More

Parachute Investing

Ever jumped out of an airplane? It's OK if you... Read More

The Secret Method to Selecting a Winning Trading System

Every successful trader has a winning system. There are of... Read More

Overvalued & Underbought

With all the bad news that has been dumped upon... Read More

Your Job

There are so many kinds of work that needs to... Read More

Financial Crime

Congress recently passed another new law that is supposed to... Read More

Trend Trading - Trading Stocks Using Technical Analysis and Swing Trading Strategies

Peter is a professional trader, Paul is not. Peter has... Read More

Stocks: Understand What You Buy!

"There is nothing more frightful than ignorance in action!" Johann... Read More

Adding Funds

Someday you may want to retire and continue to live... Read More

Trading Education: The Best of Both Worlds!

I made my very first investment in the stock market... Read More

Mutual Funds: The Modern Den of Thieves!

Mutual funds were created with the idea that one person... Read More

Big Buildings Can Mean Big Economic Disaster


Is the Stock Market for You?

Many people would like to diversify their portfolios to expand... Read More

led light bulbs wholesale commercial lighting Pete's produce ..
led light bulbs wholesale commercial lighting Pete's produce ..