Annual Report Analysis

Annual Reports issued by the company to its shareholder on yearly basis, which includes minute information about the company. It includes the balance sheet, Profit & loss A/c, Auditor’s Report, Director Report, Future plans & much other information about the company.

The Annual Report could be broken down into specific parts:

1. The Director’s Report

2. The Auditor’s Report

3. The Financial Statements

4. The Schedules & Notes to the Accounts

The Director’s Report

The Director’s Report is more important part of the Annual Report; it’s submitted by Directors of the company informing the performance of the company under their directorship

• It dictates the opinion of directors on the state of economy and political situation of the country due to which their business had impacted.

• Director gives the reason for any good or bad performance by their company in that period. As Director always blame the economic condition for bad revenues. It’s investor who decides whether to believe the director’s opinion or not. Director may not be true always.

• Director Report entails the company plans for modernization, expansion and diversification.

• Main important, Dividends recommendation is also a part of Director’s report.

An investor carefully read the director’s report, as Director always tries to portray good image of its company. Investor needs to decide whether they need to remain invested or not. Diversification plans needs to analyzed carefully by the individuals and make their investment decisions. In short, Director’s Report is quite valuable if carefully analyzed.

The Auditor’s Report

Auditor represents the shareholder & they are required to report whether the financial statements presented do in fact presen...

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Schedules

The schedules detail pertinent information about the items of Balance Sheet and Profit & Loss Account. It also details information about sales, manufacturing costs, administration costs, interest, and other income and expenses. This information is vital for the analysis of financial statements. The schedules enable an investor to determine which expenses increased and seek the reasons for this. Similarly, investors would be able to find out the reasons for the increase or decrease in sales and the products that are sales leaders. The schedules even give details of stocks and sales, particulars of capacity and productions, and much other useful information.

Notes

The notes to the accounts are even more important than the schedules because it is here that very important information relating to the company is stated regarding accounting principles.