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 passiveincomeinfo.com.

Beecher limo rentals ..

In The News:

Safeguarding your digital life with a reliable physical backup isn't just a precaution, it's a necessity. Kurt “CyberGuy" Knutsson provides the essential backup checklist.

Kurt “CyberGuy" Knutsson reveals how a Redditor exposed false recycling claims at their apartment, highlighting a report that only 21% of U.S. recyclables are processed.

Kurt "CyberGuy" Knutsson offers a travel toolkit featuring five technology tools to help you with booking flights and hotels for your summer vacation.

The bubble behind the clock on your iPhone can appear in different colors. Kurt "CyberGuy" Knutsson explains what each of those colors mean.

Scammers are using the power of artificial intelligence to mimic voices of people and are using the fake voices to commit crimes, like kidnappings.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Tech guru Kurt "CyberGuy" Knutsson explains the science behind the Invisibility Shield, a 6-foot shield that makes people become invisible.

The International Olympic Committee on Friday announced plans to use AI in various Olympic aspects, including athlete identification, training and judging.

Tech guru Kurt "CyberGuy" Knutsson explains an easy trick to avoid squinting while working or surfing the web by zooming in on your personal computer.

Streaming giant Roku has recently been targeted by a pair of cyberattacks, and the company confirmed over a half million Roku accounts were compromised.

The Land Aircraft Carrier combines an all-terrain, six-wheeled vehicle with a two-seat aircraft, which features electric vertical takeoff and landing.

The European Union has sent TikTok a "request for information" on the video sharing platform's newest app, TikTok Lite, under the Digital Services Act, with the aim to clean up social media.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

The FBI is warning the public about a recent phishing scam via text that claims its targets owe money in Pennsylvania for unpaid road toll charges.

Your Apple Music settings may be revealing to your contacts what you're listening to. Kurt "CyberGuy" Knutsson explains the process to change those settings.

Learn how to secure social media accounts, implement legacy contacts, and create a digital estate plan to protect your online assets from 'ghost hackers' after your death.

A ported phone number scam is leading to more people having their identities stolen by sophisticated scammers. Kurt “CyberGuy" Knutsson tells you what you need to know.

The Great Pacific Garbage Patch, a vast marine debris vortex, is being tackled by The Ocean Cleanup’s innovative technologies. Kurt “CyberGuy" Knutsson explains.

Discover easy solutions to tame autocorrect frustration on iOS and Android devices. Turn off, customize and add personal touches to your typing experience.

Kurt “CyberGuy" Knutsson reveals the six top things to do right now before it’s too late: Tech and life choices that can keep your safer on and offline.

Kurt “CyberGuy" Knutsson shows you some simple steps to discreetly hide apps or an entire app page on your iPhone for decluttering or confidentiality.

The ambient light sensors on smartphones may be turned into cameras, according to researches at MIT. This could pose a threat to people's privacy.

The Autonomous Road Repair System from tech firm Robotiz3d uses artificial intelligence technology to locate potholes and promptly seal them.

Scammers have stooped to using artificial intelligence to scan obituary websites to create fake obituary websites to target the grieving.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

How to Read an Annual Report

Stocks & Mutual Fund