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Annual Report

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Moneyzine Editor
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January 5th, 2024
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Annual Report

Definition

The term annual report refers to a document that summarizes the operating and financial performance of a company over the course of a year. An annual report is typically distributed to shareholders along with a definitive proxy statement approximately forty days prior to the company's annual stockholder meeting.

Explanation

Publicly-traded companies are required by federal securities laws to disclose certain operating and financial information on an ongoing basis. Rules under the jurisdiction of the Securities and Exchange Commission (SEC) require companies to send an annual report to shareholders prior to any meeting held to elect members to their Board of Directors. Companies oftentimes combine their annual reports with their Form 10-K and definitive proxy statement; distributing these materials to shareholders approximately forty days prior to these meetings.

As is the case with Form 10-K, the information contained in an annual report is typically audited by the company's accounting firm. The information found in this report normally includes:

  • Financial Highlights: a multi-year comparison of revenues, net income, earnings per share, dividends paid per share, the market price of the stock at year-end, as well as the total assets of the company.

  • Chairperson's Letter: the background of the business, operating geography, strategy, fundamental principles, operating highlights, and future direction.

  • Form 10-K: the business background, select financial data, financial statements and disclosures, exhibits to financial statements, corporate leadership, as well as controls and operating procedures.

Related Terms

  • Balance Sheet
    Also known as a statement of financial position, the balance sheet is used to show the financial health of a company at a particular point in time. The balance sheet consists of assets, liabilities, and owner's equity in the company. It is one of the four key financial statements issued by public companies.
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  • Income Statement
    The income statement is a financial accounting report that demonstrates how net income, or profit, is derived from revenues. The main categories appearing on an income statement include revenues, cost of goods sold, operating expenses, non-recurring items and net income.
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  • Cash Flow Statement
    The cash flow statement is a financial accounting report that demonstrates how cash flows both into and out of a company. Cash flow statements provide investors and analysts with insights into the change in cash and cash equivalents in a given accounting period.
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  • Form 10-K
    The term Form 10-K refers to an annual report that summarizes the business and financial performance of a company. Form 10-K is a detailed document, which is produced by companies at the close of their fiscal year. The document contains a large number of audited financial statements that publically-traded companies are required to file with the Securities and Exchange Commission each year.
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  • Form 10-Q
    The term Form 10-Q refers to a quarterly report that summarizes the business and financial performance of a company. Form 10-Q is a detailed document, which is produced three times each year and contains a number of unaudited financial statements publicly-traded companies are required to file with the Securities and Exchange Commission.
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  • Form 8-K
    The term Form 8-K refers to a report that summarizes material events that may be of importance to the Securities and Exchange Commission or investors. The Form 8-K is used to describe a number of material events as they occur. Regulations require companies to file this report with the Securities and Exchange Commission within four days of the event.
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  • Definitive Proxy Statement
    The term proxy statement refers to a document companies provide to their shareholders outlining decisions the company will discuss at a special or annual shareholder meeting. The Securities and Exchange Commission requires companies to provide a definitive proxy statement to shareholders prior to a vote on important matters.
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