As investors, you get a lot of advice to request a company’s annual report to evaluate their business before you decide to invest in them. Yet, you or your fellow investor may not know what actually the company’s annual report is or why it becomes important to your investment. That is why this guide to understand the annual report is essential for your investment.
The biggest benefit you can get from it is you know which will be more beneficial, to purchase the company stock or to just purchase the company bonds.
The definition
The annual report is a document about a company’s employees, vendors, unions, and regulators explaining its business for the year. This document is specifically prepared for the stakeholder and shareholders.
There is no exact regulation that specifies contains an annual report. Some of the companies even do not make it. However, this document is essential for investors to gain information that is not accessible somewhere else. Thus, to help and attract investors, some companies still prepare this document.
An annual report usually begins with a marketing message. That message is about insight into the current situation sector or industry in which the company operates and the nature of competition it currently faces.
Other than that this document also provides the challenges and opportunities the company may get and also the explanation behind every figure within the financial section.
Even when you should never decide to make investment solely based on the tone of an annual report, but this can tell you the kind of people you will work with. This will help you to decide whom you can entrust your capital later.
You can also know the signs of the shareholder-friendly management level of that company. After you get some experience, you will know the sign of a competent partner form their annual report.
Ways to order the document
You can get this document on most of company official websites. It is usually provided in the Adobe PDF, Microsoft Word, or HTML formats.
If you can’t find it on the websites, then you can just email the investor relations department of that company. Then, you can request the document to be sent to your email. This should not cost you any penny at all.
