An annual report is a set of documents that give readers information about how your business has performed in the previous fiscal year.
In many countries it’s mandatory for all companies to generate an annual report. The annual report includes documents such as performance highlights, financial information, and future goals, and can be made both as a digital PDF and in print.
Large corporations usually make their annual report publicly available on their website.
It’s possible to search through publicly available annual reports.
What do I put in the annual report?
There are rules for what an annual report should contain, and it might vary depending on the country you’re operating in. Typically it contains:
A chairman’s letter/CEO’s letter
The chairman or CEO opens with a statement that highlights the main achievements of the past fiscal year as well as where the business is heading next.
Company philosophy
This section describes the business’ vision and mission. This is especially important if you have stakeholders, such as investors, as it’ll inform them about future milestones and how you plan to achieve them.
Information about business operations
The third section goes through the business’ performance in the past fiscal year in detail.
Financial statement
The financial statement is the main section and the backbone of the annual report. This is where stakeholders get information about the business’ performance.
The financial statement includes
- a balance sheet which shows the financial standing of the business
- a profit and loss statement which shows the financial performance in the past fiscal year
- a cash flow statement which details cash movements in the past fiscal year
- a statement showing changes in equity
- a consolidated financial statement.
- notes to financial statements, which discloses any other necessary information
Auditor’s report
This report contains information about the responsibilities of the auditors, the nature and purpose of the audit, and finally, their opinion based on their review of the business’ financial transaction.
Management comments
This is the final section. It highlights the strengths and weaknesses of the business along with an overview of the industry and business’ position within the industry, as well as any future projects.