Annual report is the small booklet sent by companies to its shareholders once in a year. This booklet contains all the required details of the company’s performance in the year that has gone by. This information is for record that helps in assessing the annual performance of the company for the shareholders. Most shareholders don’t take it seriously, because reports by nature are inane and boring to read. On the contrary, this same document can be interesting to read if one knows where to read.
Below listed are the things that are interesting to read in the annual report which will be useful source of information for the shareholders too.
– The Chairman’s Speech: This section comes from the desk of the Chairman of the company. It speaks about the company’s overall performance, the challenges faced by the company and the way in which the company overcame those challenges. Another major focus in the Chairman’s speech is that the plans about the future. This information is important to a shareholder because it gives a glimpse about the risks associated with the business of the company one has invested in.
– Management Discussion and Analysis (MDA): This section contains an overview about the businesses that the company operates and about the overall industry. It shows an in-depth analysis about the processes going within the company. This section also speaks about the vision of the company in coming years.
– Cash Flow: Cash Flow segment consists of the information which states the income of the company from various sources. The company also says where and how the cash flow increased and where it has been invested. This section is purely numbers and is mostly ignored by retail investors. However, one must look in this section to know whether the company is generating income from its core business or not. It also gives a sneak peek into the revenue growth and profits of the company.
– Remuneration to Key Management Personnel: It contains the details of annual compensations to the top management and senior officials of the company. There is correlation between the annual compensations to the key personnel and the company’s profit.
Hopefully, these pointers will make the annual report easy to decipher and pleasant to read.
Kotak Securities is one of India’s leading stock broker offerring demat account services, online trading services, mutual fund and IPO investing service’s along with a research division specializing in Sectoral Research and Company Specific Equity Research.
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