annual_reportFINAL - Setting the global standard for...

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A nnual reports are one of the tools available to serious investors that may help them build a better under- standing of a company — its current operating results, its financial health, and its likely outlook. WHY SHOULD INVESTORS BE INTERESTED? The annual report is one of the most complete and objective sources of information available on every public company. Many annual reports appear, at first glance, to be only glossy pieces of marketing material. In fact, most compa- nies exert considerable effort to produce an attractive annual report and, quite reasonably, try to accentuate the positive by highlighting information that readers will inter- pret favorably. However, behind all the pretty pictures, there is an abundance of valuable information that provides an investor (or a potential investor) with a better under- standing of the company. Annual reports contain a wealth of useful data to aid the investor in determining measures of both value and risk for the company. And while each company attempts to produce its own unique report, the general format of the annual report is largely standardized, which makes it easier to find specific information and to make comparisons with other companies. WHAT IS INCLUDED? The U.S. Securities and Exchange Commission (SEC) and Canadian Provincial Securities Commissions (PSCs) both require companies to send shareholders an annual report every year. They also set standards for much of the informa- tion that must be included. For example, their regulations define the minimum font size for financial statements and footnotes. Sometimes the full financial review is a separate, but included, document. All public companies in the United States and Canada must include the following in their annual reports: A five-year comparison of selected financial data; A consolidated Balance Sheet, an Income Statement, a Cash Flow Statement, and a statement of changes in stockholders’ equity for the past two years; A management discussion and analysis (MD&A) of results and changes over the last two years; and
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annual_reportFINAL - Setting the global standard for...

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