Reading Financial Reports For Dummies, 3rd Edition

Chapter 5

Exploring the Anatomy of an Annual Report

IN THIS CHAPTER

Getting acquainted with the parts of the annual report

Looking at the three most important documents

Summing up the financial information

No doubt the financial statements are the meat of any annual report, but lots of trimmings make up an annual report, and you need to be able to read and understand them. Although companies must follow set rules for how they format the key financial statements, how they present the rest of the report is left to their creativity.

Some companies spend millions of dollars putting on a glossy show with color pictures throughout the report. Others put out a plain-vanilla, black-and-white version without pictures. Still, the major components of an annual report are standard, although the order in which companies present them may vary.

When you see a fat, glossy annual report from a company, you can be certain that you'll find a lot of fluff in it and probably a lot of spin about all the good things the company accomplished. No matter how fancy or plain the annual report is, as a careful ...