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Understanding Annual Reports

Ejiroghene Ekpogbe Written by Ejiroghene Ekpogbe · 47 sec read >

I learned something new from the previous session of Corporate Financial Accounting. Annual reports is not the same as financial statements! I did not know this prior to the class. I had always thought that both terms were used interchangeably.

You can learn everything you need to know about a company from its annual reports. This is because the report contains both qualitative and quantitative information.

The faculty taught that annual report is a comprehensive report that details a company’s activities throughout the preceding year. The report captures both the financial and non-financial information of the company.

I learned that the financial or quantitative aspects of the report are the financial statements. This is the part of the report that we were already familiar with. Financial statements are also called financial reports. These terms are often used interchangeably.

Readers of annual reports, for example, investors, do not only rely on the financial statements; the statements only provide information about the company’s performance and its worth. The financial reports give investors a baseline for decision making but it does not project the company’s value.

To get a more comprehensive information, investors can consult the non-financial or qualitative details in the report. Information such as the CEO or chairman’s message, the director’s message carry important information that can be useful to the investors.

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