12.7. Dealing with Information Overload

As a general rule, the larger a business, the longer its annual financial report. I've seen annual financial reports of small, privately owned businesses that you could read in 30 minutes to an hour. In contrast, the annual reports of large, publicly owned business corporations are typically 30, 40, or 50 pages (or more). You would need two hours to do a quick read of the entire annual financial report, without trying to digest its details.

If you did try to digest the details of an annual financial report, which is a long, dense document not unlike a lengthy legal contract, you would need many hours (perhaps the whole day) to do so. (Also, to get the complete picture, you should read the company's filings with the SEC in conjunction with its annual financial report. Tack on a few more hours for that!) For one thing, there are many, many numbers in an annual financial report. I've never taken the time to count the number of numbers in an average annual financial report, but I can guarantee there are at least hundreds, and reports for large, diversified, global, conglomerate businesses must have over a thousand.

12.7.1. Browsing based on your interests

How do investors in a business deal with the information overload of annual financial reports? Very, very few persons take the time to plow through every sentence, every word, every detail, ...

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