Annual financial report offers the elaborated picture of a company or organization's financial condition after the completion of a year to the employees and as well as to the different investors and lenders of funds.
· Major Elements of Annual Financial Report :
1) The major elements of Annual Financial Report are the history of stock price, total revenue, expenses, earnings, management's discussion and analysis and last but not the least, balance sheet that's known as the statement of financial position and gives the assets, liabilities, and owners' equity of the company at a particular point of time. Any investor ought to read it before investing into the companies' stock.
2) The annual financial report includes the essential disclosures of additional data, assumptions and methodologies used. To testify that the financial statements have been examined by independent auditors the annual financial report of the public limiteds' are used to add an auditor's report.
3) This report contains cash flows as well.
· Utility of the Annual Financial Report :
1)At the end of the year the annual financial report gives the information of the financial condition of the company. It estimates the financial progress, monetary status, and prospects for computing the development of the organization. Most annual reports are also served as marketing pieces. Description of the company's financial operations and income statement can be found from the annual report.
2) Annual financial statements must specify the companies' gross revenues, expenses, profitabilities, total asset and losses depending on the existence or absence of the constraints that are imposed by the contributors.
3)After the completion of a financial year the fiscal condition and also the profitability of an organization can be observed or measured by this report. Annual financial reports are generated for external distribution and made in accordance with the generally accepted accounting principles (GAAP), which are the guidelines of the report matters. Companies, every now and then, make a separate report to show the stockholders' equity instead of presenting them through balance sheet. The changes in the stock options or stock issued must be reflected in the financial reports.
· 10K and annual financial report :
The longer version of the annual financial report with little bit detail about the company's fiscal condition is popularized as 10-K. It can also be called as an examined annual revelation of the performance of the shareholders of an organization.