Inside the Annual Report

Here is what comprises an annual report:A letter from the chairman on the high points of business in the past year with predictions for the next year.

The company philosophy: A section that describes the principles and ethics that govern a company's business.An extensive report on each section of operations within the company, describing the company's services or the productsfinancial information that includes the profit and loss (P&L) statements and a balance sheet Depending on its income and expenses, the company will either make profits or show losses for a year.

The balance sheet describes assets and liabilities and compares them to the previous year. The footnotes will also give you reveal important information, as they discuss current or pending lawsuits or government regulations that may impact the company operations.

An auditor's letter in the annual report confirms that the information provided in the report is accurate and has been certified by independent accountants.