Annual Report About Annual Report: The Annual Report to Shareholders is the principal document used by most major

public companies to communicate directly with shareholders. They contain discussions of the previous year's activities, plans for the coming year, and financial data. Most jurisdictions require companies to prepare and disclose annual reports, and many require the annual report to be filed at the company's registry. Annual Reports generally contain many photos, interesting graphics, and considerable narrative, in addition to the financial statement about the company. Contents: Typically annual reports will include chairman's report, CEO's report, auditor's report on corporate governance, mission statement, corporate governance statement of compliance, statement of directors' responsibilities and invitation to the company's AGM. It also contains financial statements including auditor's report on the financial statements, balance sheet, statement of retained earnings, income statement, cash flow statement, notes to the financial statements and accounting policies. Other information deemed relevant to stakeholders may be included, such as a report on operations for manufacturing firms or corporate social responsibility reports for companies with environmentally or socially sensitive operations. Objectives: The most important objective of a company's annual report is to provide shareholders and potential investors with information on how the company has been performing and how it expects to grow in the future. Most companies consider their annual reports to be more than just updates for shareholders. They also view them as marketing tools for consumers as well as investors. Therefore, most annual reports are professionally produced, containing color, graphics, easy-to-read headings and sections, and easy-to-understand charts and graphs. Limitations: While the annual report is meant to be a full-disclosure document, it is also meant to be a marketing tool. As such, companies will highlight ratios that show growth or above-average performance. A company's operational effectiveness is a function of organizational behavior and earnings performance. Return on assets and return on equity are two of the most commonly used ratios for measuring operational effectiveness. This data is obtained from the annual report. These ratios must be compared against other companies in order to be in order to get an understanding for how one company performs. Additionally, it is important to remember that the annual report is only published once a year. As a result, the data may be old and irrelevant. It can therefore be concluded that the annual report can be manipulated to the company's favor. While financial statements have been audited and are held to certain standards, the company is not obligated to discuss company signs of weakness or issues with organizational effectiveness. As a result, it is important for the investment analyst to look at both financial data as well as employee surveys to validate annual report data.